-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PH9tWt3nBJxYJN2vFGbGyvuexQVtgttVBVei+eqnK0cnauSzIeYtQPfMJc/mjsuh YFaG8/FWvvVIECv2qGf5Yw== 0000950137-99-001167.txt : 19990428 0000950137-99-001167.hdr.sgml : 19990428 ACCESSION NUMBER: 0000950137-99-001167 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990412 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990427 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TENNECO INC /DE CENTRAL INDEX KEY: 0001024725 STANDARD INDUSTRIAL CLASSIFICATION: FARM MACHINERY & EQUIPMENT [3523] IRS NUMBER: 760515284 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-12387 FILM NUMBER: 99602125 BUSINESS ADDRESS: STREET 1: 1275 KING STREET CITY: GREENWICH STATE: CT ZIP: 06831 BUSINESS PHONE: 2038631000 MAIL ADDRESS: STREET 1: 1010 MILAM STREET STREET 2: ROOM T 2560B CITY: HOUSTON STATE: TX ZIP: 77002 FORMER COMPANY: FORMER CONFORMED NAME: NEW TENNECO INC DATE OF NAME CHANGE: 19961011 8-K 1 CURRENT REPORT 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 APRIL 12, 1999 (Date of earliest event reported) TENNECO INC. (Exact Name of Registrant as Specified in Its Charter) DELAWARE (State or Other Jurisdiction of Incorporation) 1-12387 (Commission File Number) 76-0515284 (IRS Employer Identification Number) 1275 KING STREET, GREENWICH, CONNECTICUT 06831 (Address of Principal Executive Offices) (Zip Code) (203) 863-1000 (Registrant's Telephone Number, Including Area Code) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On April 12, 1999, pursuant to a Contribution Agreement (the "Contribution Agreement") dated as of January 25, 1999, among Tenneco Packaging Inc., a wholly owned subsidiary of Tenneco Inc. ("TPI"), PCA Holdings LLC, an affiliate of Madison Dearborn Partners, Inc. ("PCA Holdings") and Packaging Corporation of America, TPI completed the contribution of the containerboard assets of its Paperboard Packaging business to a new joint venture with PCA Holdings in exchange for cash and debt assumption totaling approximately $2.0 billion and a 45% common equity interest in the joint venture, which interest is valued at approximately $200 million. The consideration received in the transaction was determined through arms-length negotiations with Madison Dearborn Partners, Inc. The containerboard assets represent substantially all of the assets of the Paperboard Packaging segment and include four mills, 67 corrugated products facilities and an ownership or controlling interest in approximately 950,000 acres of timberland. Paperboard Packaging's folding carton business was not included in the transaction. The new joint venture entity (called Packaging Corporation of America) will be headed by Paul T. Stecko, serving as its chairman and chief executive officer. Upon closing of the transaction, Mr. Stecko resigned his position as president and chief operating officer of Tenneco Inc., but will continue to serve on Tenneco Inc.'s Board of Directors. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (b) PRO FORMA FINANCIAL INFORMATION.
2 3 TENNECO INC. AND CONSOLIDATED SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS The following Unaudited Pro Forma Condensed Financial Statements of Tenneco Inc. and Consolidated Subsidiaries ("Tenneco") illustrate the effects of the contribution of the containerboard assets of Tenneco's Paperboard Packaging segment to a new joint venture with PCA Holdings LLC, an affiliate of Madison Dearborn Partners, Inc. ("PCA Holdings"). The following events occurred prior to or as a part of the transaction: (i) Tenneco Packaging Inc., a wholly owned subsidiary of Tenneco Inc. ("TPI"), borrowed $1,760 million; (ii) TPI used $1,108 million of the debt proceeds to acquire containerboard mill and timberland assets previously used by the containerboard business pursuant to operating leases; (iii) TPI used approximately $150 million of the debt proceeds to purchase containerboard business accounts receivable that had been sold to a third party; and (iv) TPI contributed the containerboard assets, subject to the new indebtedness and the existing containerboard business liabilities, to the joint venture with PCA Holdings in exchange for $247 million in cash and a 45% common equity interest in the venture valued at approximately $200 million. Following the completion of the transaction, TPI remitted the net cash proceeds of approximately $720 million to Tenneco Inc. Tenneco Inc. used the proceeds to retire short-term debt. The Unaudited Pro Forma Condensed Balance Sheet has been prepared as if such events and transactions occurred on December 31, 1998. The Unaudited Pro Forma Condensed Statement of Income has been prepared as if such events and transactions occurred as of January 1, 1998. The Unaudited Pro Forma Condensed Financial Statements should be read in conjunction with the historical financial statements of Tenneco included in Tenneco's Annual Report on Form 10-K for the year ended December 31, 1998. The Unaudited Pro Forma Condensed Financial Statements are not necessarily indicative of actual operating results or financial position had the events and transactions reflected therein occurred as of the dates indicated above, nor do they purport to indicate operating results or financial position which may be attained in the future. The pro forma adjustments, as described in the accompanying Notes to the Unaudited Pro Forma Condensed Financial Statements, are based on available information and certain assumptions that management believes are reasonable. 3 4 TENNECO INC. AND CONSOLIDATED SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED BALANCE SHEET DECEMBER 31, 1998 (MILLIONS)
PRO FORMA ADJUSTMENTS ----------------------------------------------------- CONSIDERATION, CONTRIBUTION USE OF TENNECO OF PROCEEDS, CONSOLIDATED AS FINANCING CONTAINERBOARD AND OTHER TENNECO ASSETS REPORTED TRANSACTIONS (D) ADJUSTMENTS PRO FORMA ------ -------- ------------ -------------- -------------- ------------ Current assets: Cash and temporary cash investments................. $ 36 $ 473(c) $ -- $ 247(e) $ 36 (720)(g) Receivables.................... 864 150(b) (152) -- 862 Inventories.................... 988 -- (147) -- 841 Other current assets........... 269 -- (29) (37)(j) 203 ------ ------ ------- ------ ------ Total current assets... 2,157 623 (328) (510) 1,942 Plant, property, and equipment, net............................ 3,628 1,108(b) (2,072) -- 2,664 Investment in PCA................ -- -- -- 194(f) 194 Goodwill and intangibles, net.... 1,613 -- (62) -- 1,551 Other assets and deferred charges........................ 1,393 -- (210) (27)(i) 1,156 ------ ------ ------- ------ ------ Total assets........... $8,791 $1,731 $(2,672) $ (343) $7,507 ====== ====== ======= ====== ====== LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Short-term debt (including current maturities on long term debt).................. $1,071 $ -- $ -- $ (720)(g) $ 374 23(h) Trade payables................. 701 (5)(c) (104) -- 592 Other current liabilities...... 615 -- (66) 35(h) 584 ------ ------ ------- ------ ------ Total current liabilities.......... 2,387 (5) (170) (662) 1,550 Long-term debt................... 2,360 1,760(a) (1,760) -- 2,343 (17)(c) Deferred income taxes............ 649 -- (4) (154)(j) 491 Other liabilities and deferred credits........................ 470 -- (105) -- 365 Minority interest................ 421 -- -- -- 421 Shareowners' equity.............. 2,504 (7)(c) (633) 473(k) 2,337 ------ ------ ------- ------ ------ Total liabilities and shareowners' equity............... $8,791 $1,731 $(2,672) $ (343) $7,507 ====== ====== ======= ====== ======
See the accompanying Notes to Unaudited Pro Forma Condensed Financial Statements. 4 5 TENNECO INC. AND CONSOLIDATED SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME STATEMENT YEAR ENDED DECEMBER 31, 1998 (MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS)
PRO FORMA ADJUSTMENTS ------------------------------------------------ CONTRIBUTION CONSIDERATION, TENNECO OF USE OF PROCEEDS, CONSOLIDATED AS FINANCING CONTAINERBOARD AND OTHER TENNECO REPORTED TRANSACTIONS (L) ADJUSTMENTS PRO FORMA(P) -------- ------------ -------------- ---------------- ------------ REVENUES Net sales and operating revenues................... $ 7,597 $ -- $(1,483) $ -- $ 6,114 Other income, net............. 8 -- (13) 8(m) 3 ----------- ---- ------- ------ ----------- 7,605 -- (1,496) 8 6,117 ----------- ---- ------- ------ ----------- COSTS AND EXPENSES: Cost of sales (exclusive of depreciation shown below)..................... 5,344 -- (1,096) -- 4,248 Engineering, research, and development................ 66 -- (5) -- 61 Selling, general, and administrative............. 1,106 -- (171) -- 935 Depreciation, depletion, and amortization............... 448 -- (97) -- 351 ----------- ---- ------- ------ ----------- 6,964 -- (1,369) -- 5,595 ----------- ---- ------- ------ ----------- INCOME BEFORE INTEREST EXPENSE, INCOME TAXES AND MINORITY INTEREST...................... 641 -- (127) 8 522 INTEREST EXPENSE................ 240 -- (3) (40)(n) 197 INCOME TAX EXPENSE.............. 116 -- (50) 19(o) 85 MINORITY INTEREST............... 30 -- -- -- 30 ----------- ---- ------- ------ ----------- NET INCOME (LOSS) FROM CONTINUING OPERATIONS APPLICABLE TO COMMON STOCK.... $ 255 $ -- $ (74) $ 29 $ 210 =========== ==== ======= ====== =========== EARNINGS PER SHARE Average shares of common stock -- Basic......................... 168,505,573 168,505,573 Diluted....................... 168,834,531 168,834,531 Earnings from continuing operations per share of common stock -- Basic......................... $ 1.52 $ 1.25 Diluted....................... $ 1.51 $ 1.24
See the accompanying Notes to Unaudited Pro Forma Condensed Financial Statements. 5 6 TENNECO INC. AND CONSOLIDATED SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS (a) To reflect borrowings of $1,760 million by TPI. (b) To reflect use of the debt proceeds to: (i) acquire containerboard mill and timberland assets previously used by the containerboard business pursuant to operating leases; and (ii) purchase containerboard business accounts receivable which had been sold to a third party. (c) To reflect the amount paid by Tenneco to retire certain debt of the containerboard business. As a result of this debt extinguishment, Tenneco incurred an after-tax extraordinary loss of approximately $7 million that is not reflected in the Unaudited Pro Forma Condensed Statement of Income due its non-recurring impact. Remaining proceeds from the borrowings following asset acquisition and debt retirement are reflected in cash. (d) To reflect the contribution of the containerboard assets of Tenneco's Paperboard Packaging business, subject to the new indebtedness and the containerboard business liabilities, to the new joint venture with PCA Holdings. The contribution and assumption of liabilities is subject to a post-closing adjustment based on the net working capital of the containerboard business as of the contribution date. (e) To reflect cash consideration of $247 million received for TPI's contribution of the containerboard assets, subject to the new indebtedness and containerboard business liabilities. (f) To reflect the consideration received in the form of a 45% common equity interest in the new joint venture formed with PCA Holdings. (g) To reflect the use of cash proceeds to pay down short-term corporate debt. (h) To reflect the estimated legal, investment banking, and other costs paid and incurred by Tenneco in connection with the transaction and liabilities retained by Tenneco. (i) To reflect certain intangible assets related to the containerboard business not contributed to the new joint venture that were no longer realizable as a result of the transaction. (j) To reflect the adjustment to deferred taxes resulting from the transaction. (k) To reflect the impact on shareowners' equity resulting from the transaction. (l) To reflect the adjustment to Tenneco's results of operations for the contribution of the containerboard business assets, subject to the containerboard business liabilities, to the new joint venture formed with PCA Holdings. (m) To reflect Tenneco's 45% common equity interest in the results of operations of the joint venture. (n) To reflect the adjustment to interest expense from the reduction of short-term corporate debt using cash consideration from the transactions. (o) To reflect the income tax expense effects of pro forma adjustments at an assumed statutory tax rate of 40%. (p) The pre-tax loss of approximately $290 million, $180 million after-tax or $1.07 per basic and diluted share resulting from the sale of the containerboard business assets, subject to the containerboard business liabilities, has been excluded from the Unaudited Pro Forma Condensed Statement of Income due to its non-recurring impact. 6 7 (c) EXHIBITS. The following exhibits are filed with this Report on Form 8-K (exhibits designated by an asterisk are filed with the Report; the other exhibit is incorporated by reference): 10.30 Contribution Agreement (the "Contribution Agreement"), dated as of January 25, 1999, among Tenneco Packaging Inc., PCA Holdings LLC and Packaging Corporation of America (incorporated herein by reference to Exhibit 10.30 of Tenneco Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998, File No. 1-12387). *10.31 Letter Agreement (the "Letter Agreement"), dated as of April 12, 1999 among Tenneco Packaging Inc., PCA Holdings LLC and Packaging Corporation of America, amending the Contribution Agreement. *10.32 Stockholders Agreement, as amended, dated as of April 12, 1999, among Tenneco Packaging Inc., PCA Holdings LLC and Packaging Corporation of America. *10.33 Registration Rights Agreement, as amended, dated as of April 12, 1999, among Tenneco Packaging Inc., PCA Holdings LLC and Packaging Corporation of America.
7 8 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, Tenneco Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TENNECO INC. By: /s/ Robert T. Blakely ------------------------------------ Robert T. Blakely Executive Vice President and Chief Financial Officer April 27, 1999 8 9 EXHIBIT INDEX The following exhibits are filed with this Report on Form 8-K (exhibits designated by an asterisk are filed with the Report; the other exhibit is incorporated by reference):
EXHIBIT DESCRIPTION - ------- ----------- 10.30 Contribution Agreement (the "Contribution Agreement"), dated as of January 25, 1999, among Tenneco Packaging Inc., PCA Holdings LLC and Packaging Corporation of America (incorporated herein by reference to Exhibit 10.30 of Tenneco Inc.'s Annual Report on Form 10-K for the year ended December 31, 1998, File No. 1-12387). *10.31 Letter Agreement (the "Letter Agreement"), dated as of April 12, 1999 among Tenneco Packaging Inc., PCA Holdings LLC and Packaging Corporation of America, amending the Contribution Agreement. *10.32 Stockholders Agreement, as amended, dated as of April 12, 1999, among Tenneco Packaging Inc., PCA Holdings LLC and Packaging Corporation of America. *10.33 Registration Rights Agreement, as amended, dated as of April 12, 1999, among Tenneco Packaging Inc., PCA Holdings LLC and Packaging Corporation of America.
9 EX-10.31 2 LETTER AGREEMENT 1 EXHIBIT 10.31 TENNECO PACKAGING INC. 1900 FIELD COURT LAKE FOREST, ILLINOIS 60045 April 12, 1999 PCA Holdings, LLC c/o Madison Dearborn Partners, Inc. Three First National Plaza Suite 3800 Chicago, IL 60602 Attn: Samuel M. Mencoff Justin S. Huscher Re: Contribution Agreement Gentlemen: Reference is made to that certain Contribution Agreement, dated as of January 25, 1999 (the "Contribution Agreement"), among Tenneco Packaging Inc. ("TPI"), PCA Holdings LLC ("PCA"), and Packaging Corporation of America ("Newco"). Capitalized terms used in this letter agreement not defined herein shall have the meanings set forth in the Contribution Agreement. The purpose of this letter agreement is to correct certain errors or ambiguities that were included in the Contribution Agreement, and to reflect the parties' agreements with respect to certain other matters, to the extent those agreements differ form the terms of the Contribution Agreement 1. The definition of "Assumed Indebtedness" in the Contribution Agreement refers to the definition set forth in the Preliminary Statements. The definition of "Assumed Indebtedness" in the Preliminary Statements of the Contribution Agreement was inadvertently deleted in preparing the Contribution Agreement. The parties agree that, as used in the Contribution Agreement, the term "Assumed Indebtedness" shall mean (i) the $1.21 billion borrowed by TPI under the Term Loan Facilities and (ii) the $550 million promissory note issued by TPI to J.P. Morgan Securities, Inc. (the "Morgan Interim Note"), each of which will be assigned to and assumed by Newco at Closing. 2. TPI, PCA, and Newco each hereby agree that the amount of the Term Loan Facilities and the Senior Subordinated Notes, and the terms of the Deferred-Pay Financing shall be on the terms set forth in the Offering Memorandum dated March 30, 1999, 2 notwithstanding that such amounts and terms differ from those set forth in the Contribution Agreement. 3. TPI agrees that the Term Loan Facilities, pursuant to which TPI will initially borrow $1.21 billion and which indebtedness will be assigned to and assumed by Newco as part of the Assumed Indebtedness, may, until the time of such assignment and assumption, be secured by certain depositary accounts and timberland assets of TPI, on terms satisfactory to TPI, notwithstanding that the Contribution Agreement provides for such loan to be unsecured as to TPI and that such security interest shall be released contemporaneously with the assignment and assumption by Newco. 4. The parties agree that the Senior Subordinated Notes will not be issued by TPI, but that TPI will instead borrow $550 million pursuant to the Morgan Interim Note that will be assigned to and assumed by Newco as part of the Assumed Indebtedness, and which indebtedness will be repaid by Newco at the Closing. 5. PCA hereby waives its right to elect, pursuant to Section 5.16 of the Contribution Agreement, to instruct TPI to retain the Campbell Road Property, and agrees that the Campbell Road Property will, for purposes of the Contribution Agreement, constitute Owned Real Property and will be conveyed to Newco at Closing. 6. Newco agrees that for a period of one year following the Closing Date TPI may (a) continue to use the PCA Marks on Corrugated Products purchased by TPI or its Affiliates from Newco pursuant to the Supply Agreements, until changes can be made to plates, molds, and similar items so as to allow Newco to produce such materials for TPI and such Affiliates without such PCA Marks, and (b) use the PCA marks on Corrugated Products that are in existence as of the Closing Date. Subject to the preceding sentence, TPI shall cease using the PCA Marks as soon as possible after Closing during such one year period and, following such one year period, TPI shall cease all use of any PCA Marks. 7. PCA waives the condition to Closing set forth in Section 6.2(g) of the Contribution Agreement, to the extent such closing condition would require PCA and Mr. Stecko to enter into any agreement beyond the letter agreement referred to therein, as such letter agreement may be modified. 8. TPI hereby agrees and acknowledges that it has not delivered a Dilution Notice pursuant to Paragraph E of the Preliminary Statements of the Contribution Agreement. PCA and TPI hereby agree that, notwithstanding anything in the Contribution Agreement to the contrary, upon issuance of Management Stock during the 120-day period following the Closing, Newco shall simultaneously redeem or purchase from PCA and TPI an aggregate number of Common Stock shares equal to the aggregate numbers of shares of Management Stock purchased during such 120-day period in a ratio of 55 shares from PCA to 45 shares from TPI at a price per share equal to the price per share paid by the Persons purchasing such Management Stock (provided such price per share is equal to the price per share paid for Common Stock purchased by PCA at Closing). -2- 3 9. The following changes are made to the definition of "Retained Liabilities": (A) paragraph (ix) is amended by adding the words "subject to paragraph (xiv) of this definition" after the word "Agreement" in clause (ii) thereof; and (B) a new paragraph (xiv) is added, a follows: "(xiv) all liability to make severance payments to seven named individuals who will be transferred to PCA and who have been identified to Newco and TPI in an aggregate amount of up to $385,000." 10. TPI has provided the Michigan Department of Natural Resources with a letter of credit in connection with certain operations at the Filer City Mill. TPI agrees to leave such letter of credit in place for 30 days after Closing or until Newco provides the Michigan Department of Natural Resources with a replacement letter of credit. Newco agrees to obtain and post such a replacement letter of credit within such 30-day period. Newco shall reimburse TPI for any draws made under TPI's letter of credit from and after Closing. 11. PCA and Newco hereby waive the closing condition set forth in Section 5.14(ii) of the Contribution Agreement, and TPI agrees at its sole expense to implement the steps set forth in Rick West's memorandum dated April 7, 1999, entitled "Form S-4 Exchange Option and Quarterly Filings," relating to the preparation of the quarterly financial statements referred to in Section 5.14(ii) of the Contribution Agreement provided that TPI hereby covenants it will deliver to PCA the financial statements referred to in Section 5.14(ii) of the Contribution Agreement (a) for the quarter ended March 31, 1998, no later than May 10, 1999 and (b) for each of the other quarters of 1998, no later than May 31, 1999. Newco agrees that it will cause its appropriate financial officers and employees to provide reasonable assistance to TPI in its preparation of the financial statements referenced in this paragraph 11. 12. TPI hereby certifies that during the period from and including January 25, 1999 and the Closing, TPI has complied in all material respects with and not breached Section 5.2 of the Contribution Agreement. 13. TPI agrees to obtain, at its expense, for Newco commencing no later than the end of the term of the Technology, Financial and Administrative Transition Services Agreement (the "Transition Expiration Date"), licenses to use the following software, which licenses shall be substantially commensurate with the licenses to such software held by TPI or its Affiliates and used for the Containerboard Business prior to Closing (including, without limitation, as to scope and term as described in such existing licenses): VENDOR NAME OF SOFTWARE ------ ---------------- Levi, Ray & Shoup VPS and DRS GEAC Financial Applications (GL, AR, AP, FA) Comshare System W -3- 4 Hyperion Hyperion (NT) XRT Treasury Workstation (Netware) 14. TPI agrees to obtain, for Newco commencing no later than the Transition Expiration Date, licenses to use the following software, which licenses shall be substantially commensurate with the licenses to such software held by TPI or its Affiliates and used for the Containerboard Business prior to Closing (including, without limitation, as to scope and term as described in such existing licenses): VENDOR NAME OF SOFTWARE ------ ---------------- TSI Keymaster Information Builders Focus TPI shall pay 50% of the costs of obtaining such licenses and Newco shall pay 50% of the costs of obtaining such licenses. 15. TPI's sole obligation pursuant to paragraphs 13 and 14 above shall be to purchase the licenses described in such paragraphs in the name of Newco, and shall not extend to any other fees, maintenance, costs, expenses or other payments required to be made pursuant to such licenses in respect of periods commencing after the Transition Expiration Date. The parties hereto hereby agree that neither TPI nor any of its Affiliates shall be required pursuant to the Contribution Agreement or any Ancillary Agreement to pay for any other license to use software that is not Related to the Containerboard Business but is used by TPI or its Affiliates to provide the services to Newco under the Transition Services Agreement, other than those licenses expressly described in paragraphs 13 or 14. 16. TPI , PCA and Newco hereby stipulate that the definition of "Retained Liabilities" shall include all liabilities arising from, related to or incurred in connection with any state of facts or conditions or transactions (or series of facts, conditions or transactions) related, under or otherwise in connection with (i) IFC Credit Corporation v. Tenneco Packaging, Inc. filed in the Circuit Court of Cook County, Illinois 99CH4738 (the "Lawsuit") or (ii) the Master Lease Agreement between IFC Credit Corporation and TPI (f/k/a/ Packaging Corporation of America) that is the subject of the Lawsuit, in each case other than liabilities to the extent arising from, related to or incurred in connection with any breach by Newco of its obligations under this paragraph 16. Newco agrees to cease using the equipment that is the subject of the Lawsuit (the "Equipment") and return the Equipment where directed by TPI as soon as reasonably practical, and in no event will Newco use the Equipment after (and it will return the Equipment by) June 30, 1999. Newco shall use its reasonable efforts consistent with TPI's past practice to maintain the Equipment in the -4- 5 operating condition and state of repair that it is in as of the date hereof, ordinary wear and tear excepted. 17. The parties hereby acknowledge that following the date of the Contribution Agreement and prior to the date hereof, approximately 5,963 acres of timberland located in Hamilton, Dixie and Taylor Counties, Florida that were subject to the Existing Financing Arrangements have been sold (the "Florida Property Transfer"). The parties hereby agree that (i) no PCA Indemnified Party shall have, assert or be entitled to assert any claim (and each of PCA and Newco agrees that it shall not assert or permit to be asserted any claim) against TPI or any of its Subsidiaries or Affiliates arising out of, in connection with or related to the Florida Property Transfer, whether pursuant to the Contribution Agreement or otherwise and (ii) Newco assumes no liability with respect to the Florida Property Transfer. -5- 6 Please acknowledge your agreement to the foregoing by signing below. Sincerely, TENNECO PACKAGING INC. By: /s/ James V. Faulkner, Jr. --------------------------------- Its: Vice President ---------------------------- Agreed to: PCA HOLDINGS LLC By: /s/ Samuel M. Mencoff ------------------------ Samuel M. Mencoff Managing Director PACKAGING CORPORATION OF AMERICA By: /s/ Richard B. West ------------------------ Its: Secretary -------------------- Date: April 12, 1999 --------------------- -6- EX-10.32 3 STOCKHOLDERS AGREEMENT 1 EXHIBIT 10.32 STOCKHOLDERS AGREEMENT BY AND AMONG TENNECO PACKAGING INC., PCA HOLDINGS LLC AND PACKAGING CORPORATION OF AMERICA APRIL 12, 1999 2 STOCKHOLDERS AGREEMENT THIS STOCKHOLDERS AGREEMENT (this "AGREEMENT") is made and entered into as of the 12th day of April, 1999, by and among TENNECO PACKAGING INC., a Delaware corporation ("TPI"), PCA HOLDINGS LLC, a Delaware limited liability company ("PCA"), and PACKAGING CORPORATION OF AMERICA, a Delaware corporation ("NEWCO"). RECITALS WHEREAS, TPI, PCA and Newco are parties to that certain Contribution Agreement, dated as of January 25, 1999, as amended (the "CONTRIBUTION AGREEMENT"); WHEREAS, pursuant to and subject to the terms and conditions of the Contribution Agreement, each of TPI and PCA will contribute certain assets to Newco or a Subsidiary of Newco in exchange for shares of the common stock, $.01 par value per share (the "COMMON STOCK"), of Newco; WHEREAS, PCA recognizes that TPI has substantial experience and expertise in the ownership, management and operation of the Containerboard Business (as such term and each other capitalized term used but not otherwise defined herein is defined in the Contribution Agreement); WHEREAS, TPI, PCA and Newco desire to enter into this Agreement to set forth certain arrangements with respect to the ownership, operation and management of Newco and its Subsidiaries; and WHEREAS, the execution and delivery of this Agreement is a condition to each of TPI's and PCA's respective obligation to effect the Closing. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and undertakings contained herein, and subject to and on the terms and conditions herein set forth, the parties hereto agree as follows: ARTICLE I DEFINITIONS AND TERMS 1.1 CERTAIN DEFINITIONS. As used herein, the following terms shall have the meanings set forth or as referenced below: "AFFILIATE" shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such first Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made. For the purpose of this definition, "control" means (i) the ownership or control of 50% or more of the equity interest in any Person, or (ii) the ability to direct or cause the direction of the management -1- 3 or affairs of a Person, whether through the direct or indirect ownership of voting interests, by contract or otherwise. "AGREEMENT" shall mean this Agreement, including the exhibits hereto, as the same may be amended or supplemented from time to time in accordance with the terms hereof. "BOARD" shall mean the Board of Directors of Newco. "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a day on which banks in Chicago, Illinois are authorized or obligated by Law or executive order to close. "COMMISSION" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "COMMON STOCK" shall have the meaning set forth in the Recitals hereto. "CONTRIBUTION AGREEMENT" shall have the meaning set forth in the Recitals hereto. "CPA FIRM" shall mean the independent public auditor selected pursuant to SECTION 4.3, or any subsequent independent public auditor of the books and records of Newco appointed by the Board in accordance with the terms of this Agreement. "DEMAND REGISTRATION" shall have the meaning set forth in the Registration Rights Agreement. "DGCL" shall mean the General Corporation Law of the State of Delaware. "ENCUMBRANCES" shall mean liens, charges, encumbrances, mortgages, pledges, security interests, options or any other restrictions or third-party rights. "EXEMPT SALE" shall mean: (i) any Transfer of Shares to an Affiliate of the selling party; (ii) any distribution of securities by a Person to its direct or indirect equity owners; (iii) an assignment or pledge of Shares in connection with the incurrence, maintenance or renewal of indebtedness of Newco or its Subsidiaries; (iv) any Transfer of Shares pursuant to a Public Sale; and (v) any Transfer of Shares to directors, officers, or employees of Newco or its Subsidiaries. "GAAP" shall mean United States generally accepted accounting principles, consistently applied. "INDEPENDENT THIRD PARTY" means any Person who, immediately prior to the contemplated transaction, is not the owner of in excess of 5% of any class or series of Newco's common equity on a fully-diluted basis (a "5% OWNER") and who is not an Affiliate of any such 5% Owner. -2- 4 "JUNIOR PREFERRED STOCK" shall mean the one hundred (100) authorized, issued and outstanding shares of Junior Preferred Stock entitled to elect the CEO Director, with TPI holding 45 shares and PCA holding 55 shares, respectively, of such Junior Preferred Stock. "LAW" shall mean any federal, state, foreign or local law, constitutional provision, code, statute, ordinance, rule, regulation, order, judgment or decree of any governmental authority. "MANAGEMENT BUY-IN" shall mean the purchase of Management Stock as contemplated by the Contribution Agreement. "NEWCO" shall mean Packaging Corporation of America, a Delaware Corporation. "NEW SECURITIES" shall mean any shares of capital stock or other equity securities (or debt securities convertible into such equity securities) of Newco, whether now authorized or not, and rights, options or warrants to purchase said shares of capital stock and securities of any type whatsoever that are, or may become, convertible into shares of Newco capital stock or other Newco equity securities; provided, however, that the term "New Securities" shall not include: (i) securities issued in connection with any stock split, stock dividend, reclassification or recapitalization of Newco; (ii) shares of Common Stock issued to employees, consultants, officers or directors of Newco or its Subsidiaries pursuant to: (A) the exercise of any stock option, stock purchase or stock bonus plan, agreement or arrangement for the primary purpose of soliciting or retaining the services of such Persons and which is hereafter approved by the Board; or (B) the exercise of any stock option issued pursuant to the Share Performance Plan; (iii) securities issued in a Public Offering; (iv) securities issued in connection with the acquisition of any business, assets or securities of another Person in compliance with SECTION 3.6 hereof; and (v) securities issued to any lender of Newco or one of its Subsidiaries in compliance with SECTION 3.6 hereof. "PCA" shall mean PCA Holdings LLC, a Delaware limited liability company. "PCA HOLDERS" shall collectively refer to PCA together with any other Stockholders who directly or indirectly acquire any Shares from: (i) PCA; or (ii) TPI pursuant to an Initial Period Pro-Rata Tag-Along as provided in SUBSECTION 6.3(b)(ii) below. "PERMITTED ENCUMBRANCES" shall mean liens for taxes, assessments and other governmental charges not yet due and payable or due but not delinquent or being contested in good faith by appropriate proceedings. "PERSON" shall mean an individual, a corporation, a partnership, an association, a trust, a limited liability company or any other entity or organization. "PRO RATA PORTION" shall mean, with respect to each Stockholder, that number of shares of New Securities as is equal to the product of (i) the total number of New Securities proposed to be issued or otherwise transferred multiplied by (ii) a fraction, the numerator of which is the number of shares of Common Stock (including any common equity issued or issuable in respect of such Common Stock) held by such Stockholder immediately prior to such issuance or transfer, and -3- 5 the denominator of which is the total number of shares of Common Stock (including any such common equity issued or issuable in respect of such Common Stock) which are held by all Stockholders. "PUBLIC OFFERING" shall mean an underwritten public offering pursuant to an effective registration statement under the Securities Act (or any comparable form under any similar statute then in force), covering the offer and sale of Common Stock. "PUBLIC SALE" means: (i) any sale of Common Stock pursuant to a Public Offering; or (ii) any Spin-Off. "REGISTRATION RIGHTS AGREEMENT" shall have the meaning set forth in the Contribution Agreement. "SECURITIES ACT" means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, as shall be in effect at the time. "SHARE PERFORMANCE PLAN" shall mean the equity incentive plan for directors, officers and employees of Newco and its Subsidiaries. "SHARE PERFORMANCE PLAN AMOUNT" means the number of shares of Common Stock equal to (i) 9.8% of the fully diluted Common Stock of Newco at Closing, less (ii) the aggregate percentage of Common Stock sold pursuant to the Management Buy-In. "SHARES" shall mean any Common Stock held by any Stockholder (including any equity securities issued or issuable in respect of such Common Stock pursuant to a stock split, stock dividend, reclassification, combination, merger, consolidation, recapitalization or other reorganization) and any other capital stock of any class or series of Newco held by any Stockholder. As to any particular Shares, such shares shall cease to be Shares for all purposes of this Agreement when they have been sold or transferred pursuant to a Public Sale, and the transferee of any Shares pursuant to a Public Sale shall not be considered a Stockholder for purposes of this Agreement by virtue of the ownership of Shares transferred pursuant to such Public Sale. "SPIN-OFF" shall mean any distribution by TPI or one of its Affiliates of all of its Shares of any class or series to its public stockholders, if any. "STOCKHOLDERS" means TPI, PCA and each Person other than Newco who is or becomes bound by this Agreement; provided, however, that anything contained in this Agreement to the contrary notwithstanding, directors, officers and employees who directly or indirectly acquire Shares from TPI and PCA pursuant to the Management Buy-In shall not be Stockholders for purposes of this Agreement or bound by the terms hereof. Stockholders are sometimes individually referred to herein as a "STOCKHOLDER". "SUBSIDIARY" shall mean, with respect to any Person, any corporation, limited liability company, partnership, joint venture or other legal entity of which such Person, either -4- 6 directly or through or together with any other Subsidiary of such Person, owns 50% or more of the equity interests. "SUBSIDIARY BOARD" has the meaning set forth in SECTION 3.3. "TPI" shall mean Tenneco Packaging Inc., a Delaware corporation. "TPI HOLDERS" shall collectively refer to: (i) TPI; and (ii) any other Stockholders who directly or indirectly acquire any Shares from TPI except for Stockholders who directly or indirectly acquire Shares from TPI pursuant to an Initial Period Pro-Rata Tag-Along as provided in SUBSECTION 6.3(b)(ii) below. "TPI REGISTRABLE SECURITIES" shall have the meaning set forth in the Registration Rights Agreement. "VOTING STOCK" shall mean securities of Newco of any class or series the holders of which are entitled to vote generally in the election of directors of Newco. 1.2 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof", "herein", and "hereunder", and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. (b) The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa. (c) The terms "dollars" and "$" shall mean United States dollars. (d) The term "including" shall be deemed to mean "including without limitation." (e) Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Contribution Agreement. ARTICLE II BUSINESS AND OPERATIONS OF NEWCO 2.1 PURPOSES AND BUSINESS. Except as otherwise approved pursuant to SECTION 3.6(i)(c), the sole and exclusive purpose of Newco and its Subsidiaries shall be to engage in the business of producing and selling containerboard and corrugated packaging products (other than folding carton, molded fiber and honeycomb paperboard-type products), including without limitation, the Containerboard Business (the "BUSINESS SCOPE"). Newco shall not and shall not permit any of its Subsidiaries to (and PCA shall not cause or, to the extent reasonably within PCA's control, permit Newco or any of its Subsidiaries to) engage in any other activity or business except to the extent approved by the Board in accordance with the terms and conditions hereof. -5- 7 2.2 PRINCIPAL EXECUTIVE OFFICES. The principal executive offices of Newco shall be located at 1900 West Field Court, Lake Forest, Illinois or such other location as determined by the Board. 2.3 ANNUAL BUSINESS PLAN. (a) PREPARATION. No later than 90 days prior to the expiration of any fiscal year of Newco, the Board shall discuss and approve (in the manner set forth in SECTION 3.6 hereof) an annual business plan and budget for Newco and its Subsidiaries (the "ANNUAL BUSINESS PLAN") for the next succeeding fiscal year, which plan shall address, among other things: (i) The general business direction, policies and programs for Newco and its Subsidiaries during such period; (ii) A budget for Newco and its Subsidiaries for such period, setting forth projected revenues, costs and expenses (including capital expenditures); (iii) The extent to which Newco and/or its Subsidiaries will make any expenditures in connection with business acquisitions; and (iv) Information, plans, budgets, forecasts and projections of the nature included in the annual business plan for 1999 set forth as EXHIBIT 2.3(a), which shall be the initial Annual Business Plan. The Board is expressly empowered to delegate to the management of Newco the responsibility for the initial preparation of each Annual Business Plan, subject to the final approval of each such plan by the Board as provided herein. (b) EFFECT OF ANNUAL BUSINESS PLAN. The parties agree that the business and operations of Newco and its Subsidiaries will be conducted in accordance with the applicable Annual Business Plan in all material respects and in compliance with SECTION 3.6 hereof. ARTICLE III BOARD OF DIRECTORS 3.1 GENERAL. From and after the Closing, each Stockholder will vote all of its respective Shares and any other Voting Stock over which it possesses direct or indirect voting power and will take all other necessary or desirable actions within its direct or indirect control (whether in its capacity as a stockholder of Newco or otherwise), and Newco will take all necessary and desirable actions within its control, in order to give effect to the provisions of this ARTICLE III. By way of example and without limiting the generality of the foregoing, TPI and PCA shall amend the Certificate of Incorporation or By-laws or both, as applicable, of Newco and each Subsidiary to incorporate and effectuate the provisions in this ARTICLE III and to authorize and designate the Junior Preferred Stock for the purpose of implementing the provisions relating to the CEO Director as -6- 8 provided herein. With respect to the enumeration of the matters in SECTION 3.6 below, such matters shall be set forth in the By-laws (and not the Certificate of Incorporation) except with respect to the establishment of committees of the Board and each Subsidiary Board and the dissolution of Newco, which matters shall be set forth in the Certificate of Incorporation. 3.2 POWERS. Subject to the provisions of the DGCL, the Certificate of Incorporation of Newco, the By-laws of Newco and this Agreement, the business and affairs of Newco shall be managed by or under the direction of the Board. 3.3 SIZE AND COMPOSITION. The Board shall consist of six individuals as follows: (i) two directors shall be designated in writing by TPI; (ii) three directors shall be designated in writing by PCA; and (iii) the remaining director shall be the Chief Executive Officer of Newco (the "CEO Director"). The directors in the preceding clause (i) (the "TPI DIRECTORS") and in the preceding clause (ii) (the "THE PCA DIRECTORS") are sometimes collectively referred to as the "TPI/PCA DIRECTORS." TPI and PCA, as the holders of the Junior Preferred Stock and thus entitled to elect the CEO Director, shall: (x) at each election of directors (or filling of a vacancy with respect to the CEO Director), elect the individual then serving as the Chief Executive Officer of Newco as the CEO Director; and (y) remove the CEO Director if the CEO Director ceases to serve as the Chief Executive Officer of the Company. The size and composition of the board of directors or similar governing body of each Subsidiary of Newco (each, a "SUBSIDIARY BOARD") and the manner in which the initial members and any subsequent members (including any subsequent member selected or appointed to fill a vacancy) of any such Subsidiary Board will be the same as that of the Board. Anything to the contrary contained herein notwithstanding, the rights of each of TPI and PCA to designate directors as provided herein shall not be assignable (by operation of law, the transfer of Shares or otherwise) without the prior written consent of the other; provided, however, that each of TPI and PCA shall be entitled to assign its rights to designate directors as provided herein to one of its Affiliates that is (or becomes) a Stockholder without the prior written consent of the other. If directed by PCA, a representative of J.P. Morgan & Co. shall be entitled to attend meetings of (and receive information provided to the directors of) the Board and each Subsidiary Board; provided, however, that such representative shall not be or have any rights of a director of the Board or any Subsidiary Board. 3.4 TERM; REMOVAL; VACANCIES. The members of the Board or any Subsidiary Board other than the CEO Director shall hold office at the pleasure of the Stockholder which designated them. Any such Stockholder may at any time, by written notice to the other Stockholder and Newco, remove (with or without cause) any member of the Board or any Subsidiary Board designated by such Stockholder other than the CEO Director. Subject to applicable Law, no member of the Board or any Subsidiary Board may be removed except by written request by the Stockholder that designated the same. In the event a vacancy occurs on the Board (or a Subsidiary Board) for any reason, the vacancy will be filled by the written designation of the Stockholder entitled to designate the director creating the vacancy. 3.5 NOTICE; QUORUM. Meetings of the Board and any Subsidiary Board may be called upon three days' prior written notice to all directors stating the purpose or purposes thereof. Such notice shall be effective upon receipt, in the case of personal delivery or facsimile transmission, -7- 9 and five Business Days after deposit with the U.S. Postal Service, postage prepaid, if mailed. The presence in person of three of the five TPI/PCA Directors shall constitute a quorum for the transaction of business at any special, annual or regular meeting of the Board or any Subsidiary Board. Each Stockholder shall use its reasonable efforts to ensure that a quorum is present at any duly convened meeting of the Board or any Subsidiary Board and each of TPI and PCA may designate by written notice to the other an alternate representative to act in the absence of any of its designates at any such meeting. If at any meeting of the Board or any Subsidiary Board a quorum is not present, a majority of the directors present may, without further notice, adjourn the meeting from time to time until a quorum is obtained. 3.6 VOTING. Each member of the Board and each Subsidiary Board shall be entitled to cast one vote on each matter considered by such Board and Subsidiary Board, respectively; provided, however, that in the event that a vote would result in a 3-3 tie with respect to a matter, the CEO Director shall not be entitled to vote with respect to such matter (the Board and each Subsidiary Board shall poll its members prior to any vote to effectuate the purposes of this sentence). Except as otherwise expressly provided by this Agreement, the act of a majority of the members of the Board and each Subsidiary Board present at any meeting at which a quorum is present shall constitute an act of the Board or Subsidiary Board, as applicable. Notwithstanding anything to the contrary contained herein: (i) the following matters shall require, in addition to any other vote required by applicable law, the affirmative vote of at least four of the five TPI/PCA Directors; (ii) Newco shall not directly or indirectly take, and shall not permit any of its Subsidiaries to directly or indirectly take, any of the following actions without first obtaining such approval; and (iii) PCA shall not cause or, to the extent reasonably within PCA's control, permit Newco or any of its Subsidiaries to take any of the following actions without first obtaining such approval: (i) (a) the approval of any Annual Business Plan, (b) any material change to an approved Annual Business Plan, and (c) engaging in or the ownership or operation of any activities or business by Newco and/or any of its Subsidiaries which are not within the Business Scope; (ii) subject to applicable Law, any dissolution or liquidation of Newco; (iii) (a) during the 12-month period beginning on the Closing Date, any amendment of the certificate of incorporation, articles of incorporation, by-laws or other governing documents of Newco or any of its Subsidiaries (other than such amendment which may be necessary in connection with other actions (or inactions) which would be permissible under this Agreement but for this clause (a)); and (b) from and after such 12-month period, any amendment of the certificate of incorporation, articles of incorporation, by-laws or other governing documents of Newco or any of its Subsidiaries which would: (1) treat any TPI Holder disproportionately vis-a-vis any PCA Holder; (2) place any restriction or limitation on the ability of any TPI Holder to Transfer all or any portion of its Shares or reduce the consideration received or to be received by such TPI Holder in connection with such Transfer; or (3) cause such governing documents, taken as a whole, to be less favorable to a stockholder than the typical governing documents of a publicly traded company engaged in a business within the Business Scope; -8- 10 (iv) any merger, consolidation, reorganization (except as provided in ss.253 of the DGCL and except for a merger, consolidation or reorganization in which the consideration to be received by TPI is cash, publicly traded securities or a combination thereof, and TPI Holders are not treated disproportionately or differently than PCA Holders) or the issuance of capital stock or other securities of Newco or any of its Subsidiaries (other than: (a) the formation of or issuance of securities of a wholly-owned Subsidiary, (b) the issuance of up to the number of shares of Common Stock equal to the Share Performance Plan Amount pursuant to the Share Performance Plan, (c) issuances of a number of shares of Common Stock which, on a cumulative basis from and after the Closing, does not exceed 5% of the number of shares of Common Stock outstanding as of the Closing, and (d) issuances pursuant to the Management Buy-In); (v) the sale, transfer, exchange, license, assignment or other disposition by Newco and/or any of its Subsidiaries of assets having a fair market value exceeding $32.5 million in any transaction or series of related transactions (excluding sales of inventory and other assets in the ordinary course of business and timberlands sales pursuant to SECTION 5.2 hereof), except in each case for Permitted Encumbrances; (vi) the acquisition of assets (tangible or intangible) by Newco and/or any of its Subsidiaries (including any capital expenditure not included in the approved Annual Business Plan) for an acquisition price exceeding $32.5 million in value in any transaction or series of related transactions (excluding acquisitions of inventory and other assets in the ordinary course of business); (vii) the acquisition of another Person or an existing business from another Person in any transaction or series of related transactions or the entry into any partnership or formal joint venture or similar arrangement involving an acquisition price or investment exceeding $32.5 million in value; (viii) the refinancing of existing indebtedness, amendment of any existing loan or financing arrangement or incurrence of any new indebtedness by Newco and/or any of its Subsidiaries on terms which either: (a) are, taken as a whole, less favorable to Newco and its Subsidiaries than the terms then reasonably available in the financial markets to similarly situated borrowers; (b) place any restriction or limitation on the ability of any TPI Holder to Transfer all or any portion of its Shares; or (c) include any event of default or other materially adverse consequence to Newco and/or any of its Subsidiaries (including, for example, an increase in the interest rate) as a result of a sale of all or a portion of any Stockholder's Shares; (ix) the making or guarantee by Newco or any of its Subsidiaries of any loan or advance to any Person except: (a) in the ordinary course of business; (b) to a wholly owned Subsidiary; (c) for advances to employees in amounts not to exceed $500,000 to any one individual and $5 million in the aggregate; (d) for loans or advances made in connection with any acquisition of the business, capital stock or assets or any other Person that is otherwise permitted or approved as provided by this SECTION 3.6; and (e) guarantees, loans and -9- 11 advances in connection with the Management Buy-In and Share Performance Plan, not to exceed $15 million in the aggregate; (x) the entry into, or amendment of, contracts or other transactions between Newco and/or any of its Subsidiaries, on the one hand, and a Stockholder or any Affiliate thereof, on the other hand except for: (a) the execution and delivery of the Contribution Agreement, Ancillary Agreements and other documents and agreements to be delivered by Newco at Closing pursuant to the Contribution Agreement; and (b) contracts, amendments and transactions which are no less favorable to Newco and its Subsidiaries than could be obtained from TPI or its Affiliates or Independent Third Parties negotiated on an arms-length basis; (xi) the direct or indirect redemption, retirement, purchase or other acquisition of any equity securities of Newco or any of its Subsidiaries (other than securities of its wholly owned Subsidiary) except for pro rata redemptions with respect to the proceeds received from the disposition of the timberlands or any of the assets or operations related thereto or located thereon or pursuant to the provisions of agreements with employees of the Corporation or its Subsidiaries under which such equity securities were originally issued to such employees; (xii) the appointment of the members of any committee of the Board or any Subsidiary Board, unless at least one member of such committee is a director who was designated by TPI; (xiii) (a) the creation of any Subsidiary, unless: (1) all of the equity interests of such Subsidiary are owned by Newco, or by another Subsidiary in which all the equity interests of such other Subsidiary are owned directly or indirectly by Newco; and (2) the by-laws or similar governing documents of each such Subsidiary contain provisions regarding the size, composition, quorum requirements and voting of the board of directors equivalent to those provided for herein with respect to Newco; and (b) the Transfer of any equity interest in a Subsidiary other than to Newco or another Subsidiary in which all the equity interests of such other Subsidiary are owned by Newco. (xiv) removal of the independent public auditors of Newco or a Subsidiary of Newco or appointment of any public auditors which are not one of the Big Five accounting firms; and (xv) delegation of any of the matters covered by any of clauses (i) through (xiv) above to any committee of the Board or committee of any Subsidiary Board. Notwithstanding the foregoing: (i) the approvals required by this SECTION 3.6 with respect to any of the matters in SUBSECTIONS (ii) THROUGH (xv) above shall not apply to any matter included in an Annual Business Plan which has been approved pursuant to this SECTION 3.6; (ii) nothing in this SECTION 3.6 shall restrict the sale of the timberlands or any of the assets or operations related thereto or located thereon; and (iii) nothing in this SECTION 5 shall restrict the -10- 12 issuances of management equity (representing in the aggregate up to 9.8% of Newco's outstanding Common Stock) and the related distribution of proceeds from such issuance and the repurchase of the corresponding number of outstanding shares for such issuances as contemplated in the Contribution Agreement. TPI hereby covenants and agrees, as more fully described in this paragraph, that it shall use its reasonable good faith efforts to not cause or, to the extent reasonably within its control, permit any member of the Board or Subsidiary Board designated by TPI to withhold approval of a matter recommended for approval by management of Newco and presented to the Board or Subsidiary Board for consideration which requires the affirmative vote of four of the five TPI/PCA Directors pursuant to this SECTION 3.6. TPI's covenant and agreement in the preceding sentence: (i) shall relate only to matters, the approval of which TPI determines in good faith are in the best interests of TPI and its stockholders and Affiliates; and (ii) is exclusive to TPI and shall not be binding upon any direct or indirect transferee of TPI's Shares. 3.7 TELEPHONIC MEETINGS; WRITTEN CONSENTS. Except as may otherwise be provided by applicable Law, any action required or permitted to be taken at any meeting of the Board or any committee thereof may be taken without a meeting pursuant to a written consent, in compliance with the DGCL and SECTION 3.6 hereof and such written consent is filed with the minutes of the proceedings of the Board or such committee. Any meeting of the Board or any committee thereof may be held by conference telephone or similar communication equipment, so long as all Board or committee members participating in the meeting can hear one another clearly, and participation in a meeting by use of conference telephone or similar communication equipment shall constitute presence in person at such meeting. 3.8 INITIAL DIRECTORS. TPI and PCA shall make their designations pursuant to SECTION 3.3 on or prior to the Closing Date. 3.9 RECAPITALIZATION OF NEWCO UNDER CERTAIN CIRCUMSTANCES. For any Public Offering or Spin-Off prior to the time Newco becomes subject to the Exchange Act with respect to Shares: (i) Newco shall use commercially reasonable efforts to effect a stock split, stock dividend or stock combination which, in the opinion of the managing underwriter for the Public Offering or TPI's financial advisor in connection with a Spin-Off, is desirable for the sale, marketing or distribution of the Shares to the public; and (ii) each Stockholder agrees to vote all of its respective Shares and any other Voting Stock over which it posses direct or indirect voting power in order to cause such stock split, dividend or combination to be effected consistent with the provisions of this SECTION 3.9. ARTICLE IV ACCOUNTING, BOOKS AND RECORDS 4.1 FISCAL YEAR. The fiscal year of Newco shall be the period commencing January 1 in any year and ending December 31 of that year, except that the first fiscal year of Newco shall commence on the Closing Date and end on December 31 of the year in which the Closing Date occurs. -11- 13 4.2 BOOKS AND RECORDS. Newco shall keep at its principal executive offices books and records typically maintained by Persons engaged in similar businesses and which set forth a true, accurate and complete account of the business and affairs of Newco and its Subsidiaries, including a fair presentation of all income, expenditures, assets and liabilities thereof. Such books and records shall include all information reasonably necessary to permit the preparation of financial statements required by applicable Law in accordance with GAAP. Each Stockholder who, together with its Affiliates, owns 17-1/2% or more of the outstanding common equity of Newco (a "17-1/2% Stockholder") and its respective authorized representatives shall have the right, at all reasonable times and upon reasonable advance written notice to Newco, to have access to, inspect, audit and copy the original books, records, files, securities, vouchers, canceled checks, employment records, bank statements, bank deposit slips, bank reconciliations, cash receipts and disbursement records, and other documents of Newco and its Subsidiaries. 4.3 AUDITORS. Newco shall engage one of the Big Five accounting firms as the initial independent public auditors of Newco and its Subsidiaries. 4.4 REPORTING. Newco shall use its reasonable best efforts to deliver to each Stockholder unaudited consolidated interim financial statements for Newco and its Subsidiaries for such fiscal quarter (including a balance sheet as of the end of such period and statements of income, stockholders' equity and cash flows for such period within 30 days after the close of each fiscal quarter. Newco will use its reasonable best efforts to deliver to each Stockholder within 60 days after the close of each fiscal year of Newco consolidated annual financial statements for Newco and its Subsidiaries for such fiscal year (including a balance sheet as of the end of such fiscal year and statements of income, stockholders' equity and cash flows for such fiscal year), in each case audited and certified by the CPA Firm. Such annual and interim financial statements shall contain such statements and schedules, prepared in accordance with the requirements of the Stockholders, as may be requested in writing by any of the 17-1/2% Stockholders. Newco shall bear the cost of providing financial and accounting information reasonably required by any of the 17-1/2% Stockholders in the preparation of such 17-1/2% Stockholder's own financial statements. Such annual and interim financial statements shall be prepared in accordance with GAAP, shall be true and accurate in all material respects and shall present fairly the financial position and results of operations of Newco. 4.5 STOCKHOLDER'S AUDIT. Upon reasonable advance written notice to Newco, any Stockholder may request an audit of the books and records of Newco and its Subsidiaries (a "STOCKHOLDER'S AUDIT") by an independent auditor of its selection, other than the CPA Firm. Any Stockholder's Audit shall be at the expense of the requesting 17-1/2% Stockholder unless material error or fraud is found, in which case such audit shall be at the expense of Newco. All information obtained by any 17-1/2% Stockholder in any such audit shall be treated as confidential. 4.6 CONSENT OF NEWCO AUDITORS. Upon request from time to time by TPI, Newco shall use its commercially reasonable efforts to obtain the written agreements of Newco's auditors to permit the use of Newco's Audited Financial Statements in connection with TPI's and/or its Affiliates filings made with the Securities and Exchange Commission and, subject to such auditor's normal procedures, in private or public offerings of securities of TPI and/or its Affiliates as may be -12- 14 reasonably requested by TPI. In addition, Newco will use commercially reasonable efforts to cause Newco's auditors to provide a comfort letter in accordance with SAS 72 for any such offering. ARTICLE V CERTAIN MATTERS REGARDING STOCKHOLDERS AND NEWCO 5.1 TRANSACTIONS BETWEEN STOCKHOLDERS AND NEWCO. The Stockholders hereby approve on behalf of Newco the Contribution Agreement and each of the Ancillary Agreements and other documents and agreements to be delivered by Newco at the Closing pursuant to the Contribution Agreement, and the transactions contemplated thereby. 5.2 SALE OF TIMBERLANDS. Newco, TPI and PCA hereby acknowledge that it is their mutual intention to effect a sale for cash of the timberlands (and the assets and operations related thereto and located thereon) included in the Contributed Assets and to distribute the net proceeds from any such sale as soon as practicable following the Closing Date. If and to the extent the net proceeds from any such sale are distributed to the holders of the Common Stock, such distribution shall be on a pro-rata basis among such holders. ARTICLE VI TRANSFER OF SHARES 6.1 GENERAL. No Stockholder will directly or indirectly sell, assign, pledge, encumber, hypothecate, dispose of or otherwise transfer ("TRANSFER") any Shares or interest in any Shares, agree to any such Transfer or permit any such interest to be subject to Transfer, directly or indirectly, by merger or other operation of law, agreement or otherwise, except pursuant to and in compliance with the provisions of this ARTICLE VI. Any purported Transfer in any other manner, unless otherwise expressly permitted by this ARTICLE VI, shall be null and void, and shall not be recognized or given effect by Newco or any Stockholder. Any other provision of this Agreement, including, without limitation, in this Article VI, to the contrary notwithstanding (except pursuant to Section 8.1), neither TPI nor PCA shall Transfer any Shares of the Junior Preferred Stock prior to the termination of this Agreement. 6.2 TRANSFERS BY TPI HOLDERS. (a) PERMITTED TRANSFERS. A TPI Holder may at any time, without the consent of any other Stockholder, Transfer any or all of its Shares or interests in Shares to any Affiliate or third Person or Persons or pursuant to a Public Sale, subject to the remaining provisions of this SECTION 6.2; provided, however, that, except in the case of a Public Sale, TPI shall not Transfer any Shares to any other Person then engaged, directly or indirectly, in a business within the Business Scope with annual revenues from such business in excess of $100 million without PCA's prior written consent. The foregoing consent right shall not be assignable by PCA or inure to the benefit of any transferee, successor or assign of PCA, except for an Affiliate of PCA who is (or becomes) a Stockholder. Notwithstanding the foregoing and except in the case of a Public Sale or sale to directors, officers or employees of Newco pursuant to the Management Buy-In, any Transfer of Shares by a TPI Holder shall be null and void and Newco shall refuse to recognize such Transfer -13- 15 unless the transferee executes and delivers to each party hereto an agreement (a "TPI JOINDER AGREEMENT"): (i) acknowledging that all Shares or interests in any Shares so transferred are and shall remain subject to this Agreement; and (ii) agreeing to be bound hereby. Upon execution of a TPI Joinder Agreement, except as otherwise expressly provided herein and except for any right hereunder to consent to any action or proposed action (including, without limitation, any proposed Transfer of Shares), the rights of the transferring TPI Holder hereunder with respect to the Shares transferred shall be assigned to such transferree. Any TPI Holder shall notify the other parties of any intended Transfer of Shares or interests in Shares pursuant to this SECTION 6.2 (other than pursuant to an Exempt Sale), giving the name and address of the intended transferee; provided, however, that no otherwise valid Transfer shall be rendered invalid solely as a result of a failure to give notice hereunder. Transferees of a TPI Holder shall assume all obligations of the transferring TPI Holder hereunder, but, except with respect to an Affiliate of TPI, shall not be entitled to any rights of a TPI Holder. 6.3 TRANSFERS BY PCA HOLDERS. (a) PERMITTED TRANSFERS. A PCA Holder may at any time, without the consent of any other Stockholder, (i) Transfer any or all of its Shares to an Affiliate of PCA, (ii) Transfer any or all its Shares pursuant to an Exempt Sale, or (iii) sell any or all of its Shares to any other third Person or Persons or pursuant to a Public Sale or otherwise Transfer Shares, subject to the remaining provisions of this SECTION 6.3. The foregoing consent right shall not be assignable by TPI or inure to the benefit of any transferee, successor or assign of TPI, except for an Affiliate of TPI who is (or becomes) a Stockholder. Notwithstanding the foregoing and except in the case of a Public Sale or sale to directors, officers or employees of Newco pursuant to the Management Buy-In, any Transfer of Shares by an PCA Holder shall be null and void and Newco shall refuse to recognize such Transfer unless the transferee executes and delivers to each party hereto an agreement (an "PCA JOINDER AGREEMENT"): (i) acknowledging that all Shares or interests in any Shares so transferred are and shall remain subject to this Agreement; and (ii) agreeing to be bound hereby. Upon execution of an PCA Joinder Agreement, except as otherwise expressly provided herein and except for any right hereunder to consent to any action or proposed action (including, without limitation, any proposed Transfer of Shares), the rights of the transferring PCA Holder hereunder with respect to the Shares transferred shall be assigned to such transferee. Any PCA Holder shall notify the other parties of any intended Transfer of Shares or interests in Shares pursuant to this SECTION 6.3 (other than an Exempt Sale), giving the name and address of the intended transferee; provided, however, that no otherwise valid Transfer shall be rendered invalid solely as a result of a failure to give notice hereunder. (b) TAG-ALONG RIGHTS. TPI and its Affiliates shall have tag-along rights as provided in this SECTION 6.3(b): (i) In the event any PCA Holder desires to sell all or any part of any class or series of its Shares to a third Person (other than pursuant to an Exempt Sale), it shall provide prior written notice (the "SALE NOTICE") to TPI setting forth in reasonable detail the terms and conditions on which the proposed sale is to be made and identifying the proposed purchaser. TPI shall have the option (the "TAG-ALONG OPTION") to sell any or all of its Shares of the same class and series to -14- 16 the proposed purchaser on the terms and conditions set forth in such Sale Notice subject to the provisions set forth in this Section 6.3(b). TPI shall exercise its Tag-Along Option by giving written notice to PCA within ten Business Days following its receipt of the Sale Notice, which notice shall specify the number of Shares of the same class and series as to which TPI is exercising its Tag-Along Right (the "SPECIFIED SHARES"). In the event TPI exercises its Tag-Along Option with respect to any Sale Notice: (A) if such exercise is within 14 months after the Closing Date, the PCA Holder shall not be entitled to sell any of its Shares unless and until the prospective purchasers or PCA has purchased all of the Specified Shares; and (B) if such exercise is more than 14 months after the Closing Date, TPI shall be entitled to sell its pro rata share (based on the number of Shares proposed to be sold by the PCA Holder and TPI, respectively) of the Shares proposed to be sold by the PCA Holder in the Sale Notice, in each case on terms and conditions no less favorable than specified in the Sale Notice or otherwise applicable to the sale to such prospective purchasers by the PCA Holder. In the event TPI does not exercise its Tag-Along Option with respect to any Sale Notice, the PCA Holder shall be entitled to sell all or any part of its Shares as specified in the Sale Notice to the prospective purchaser specified in the Sale Notice on the terms and conditions set forth in the Sale Notice (subject to the provisions of the third sentence of SECTION 6.3(a) hereof). (ii) Notwithstanding SUBSECTION 6.3(b)(i) above, with respect to sales by a PCA Holder of any part of any class or series of its Shares to a third Person (other than pursuant to an Exempt Sale) prior to the expiration of the six-month period beginning on the Closing Date at a per share price which does not exceed the per share price paid (excluding any interest for the carrying cost of such Share) by such PCA Holder for such Shares pursuant to the Contribution Agreement: (A) TPI and its Affiliates shall not have a Tag-Along Option during such six-month period for (i) sales of Shares (other than PIK Preferred) in the aggregate amount of $40 million; and (ii) the sale of 9.3% of the number of Shares of PIK Preferred issued at Closing ("EXCLUDED TAG-ALONG SALES); and (B) TPI shall have a Tag-Along Option on a pro-rata basis (i.e., on the same basis applicable 14 months after the Closing Date as provided in SUBSECTION 6.3(b)(i) above) with respect to such sales of Shares by PCA Holders during such six-month period in excess of the Excluded Tag Along Sales up to an aggregate amount of consideration for such additional sales of $100 million (the "INITIAL PERIOD PRO-RATA TAG-ALONG"). The provisions of this SUBSECTION 6.3(b)(ii) shall terminate upon the expiration of the six-month period beginning on the Closing Date. (iii) Notwithstanding anything in this Agreement to the contrary, the rights under this SECTION 6.3(b) shall be exclusive to TPI and its Affiliates and shall not be assignable to or inure to the benefit of any transferee of TPI or any successors or assigns of TPI, other than Affiliates of TPI. 6.4 DRAG-ALONG RIGHTS. -15- 17 (a) DRAG-ALONG SALE. If a sale of all or substantially all of Newco's assets determined on a consolidated basis or a sale of all or substantially all of Newco's outstanding capital stock (whether by merger, recapitalization, consolidation, reorganization, combination or otherwise) to any Independent Third Party or group of Independent Third Parties is approved by the Board or the holders of a majority of the Shares of Common Stock held by the PCA Holders (a "DRAG-ALONG SALE"), each Stockholder will consent to raise no objections against such Drag-Along Sale on the terms and subject to the conditions set forth in the remaining provisions of this SECTION 6.4. (b) DRAG-ALONG NOTICE. A notice regarding any Drag-Along Sale (a "DRAG-ALONG NOTICE") shall be delivered within two Business Days following approval of any Drag-Along Sale by Newco or the PCA Holders to each Stockholder. The Drag-Along Notice shall include a copy of a bona fide offer from the intended buyer, which shall set forth the principal terms of the Drag-Along Sale, including the name and address of the intended buyer. (c) DRAG-ALONG SALE OBLIGATIONS. In connection with any Drag-Along Sale, the Stockholders shall, and shall elect directors who shall, take all necessary or desirable actions in connection with the consummation of the Drag-Along Sale. If the Drag-Along Sale is structured as: (i) a merger or consolidation, each Stockholder shall waive any dissenters rights, appraisal rights or similar rights in connection with such merger or consolidation; (ii) a sale of stock, each Stockholder shall agree to sell all of its Shares and rights to acquire Shares on the terms and conditions so approved; or (iii) a sale or assets, each Stockholder shall vote in favor of such sale and any subsequent liquidation of Newco or other distribution of the proceeds therefrom. Each Stockholder shall take all necessary or desirable actions in connection with the consummation of the Drag-Along Sale reasonably requested by PCA or Newco, and each Stockholder shall be obligated to agree on a pro rata, several (and not joint) basis (based on the share of the aggregate proceeds paid in such Drag-Along Sale) to any indemnification obligations that the PCA Holders agree to provide in connection with such Drag-Along Sale (other than any such obligations that relate specifically to a particular holder of Shares such as indemnification with respect to representations and warranties given by a holder regarding such holder's title to and ownership of Shares). (d) CONDITIONS TO DRAG-ALONG SALE OBLIGATIONS. The obligations of each Stockholder with respect to a Drag-Along Sale are subject to the satisfaction of the following conditions: (i) the consideration to be received by the Stockholders with respect to the Drag-Along Sale shall consist only of cash, publicly-traded securities, or a combination of cash and publicly-traded Securities; (ii) if any holders of a class or series of Shares are given an option as to the form and amount of consideration to be received, each holder of such class or series of Shares will be given the same option; (iii) each holder of then currently exercisable rights to acquire shares of a class or series of Shares will be given an opportunity to exercise such rights prior to the consummation of the Drag-Along Sale and participate in such sale as holders of such class or series of Shares; and (iv) each Stockholder shall be entitled to receive consideration per each Share in connection with the Drag-Along Sale at least equivalent to the consideration received per each Share of the same class and series by any PCA Holder in connection with the Drag-Along Sale. (e) EXPENSES. Each Stockholder will bear its pro-rata share -16- 18 (based on the share of the aggregate proceeds paid in such Drag-Along Sale) of the costs of any sale of Shares pursuant to a Drag-Along Sale to the extent such costs are incurred for the benefit of all holders of Common Stock and are not otherwise paid by Newco or the acquiring party. For purposes of this SECTION 6.4(e), costs incurred in exercising reasonable efforts to take all necessary actions in connection with the consummation of a Drag-Along Sale in accordance with this SECTION 6.4 shall be deemed to be for the benefit of all holders of Common Stock. Costs incurred by Stockholders on their own behalf will not be considered costs of the transaction hereunder. (f) EXCEPTION TO DRAG-ALONG. Notwithstanding anything to the contrary contained in this SECTION 6.4, no Stockholder shall have any obligation under this SECTION 6.4 with respect to a Drag-Along Sale if the Drag-Along Notice with respect to the Drag-Along Sale is received by TPI after the holders of TPI Registrable Securities have requested a Demand Registration and for a period thereafter ending on the date following consummation of the sale of all Shares subject to such Demand Registration unless, in the opinion of the managing underwriter for such Demand Registration, the per Share consideration payable pursuant to the Drag-Along Sale exceeds the net proceeds per Share expected to be received by selling stockholders pursuant to the Demand Registration. 6.5 INDIRECT TRANSFERS OF INTERESTS. Any Transfer of equity securities of PCA which results in the group of Persons holding such equity securities immediately following the transactions contemplated in the Contribution Agreement from ceasing to beneficially own, as a group, directly or indirectly, 50.1% or more of the equity securities of PCA or enough voting equity of PCA to be able to cause a majority of the board of managers (or equivalent governing body or members) to be elected shall be deemed to be a Transfer of Shares hereunder and any such Transfer shall be subject to the provisions of this ARTICLE VI as if PCA had directly transferred Shares. 6.6 LEGENDS. A copy of this Agreement shall be filed with the Secretary of Newco and kept with the records of Newco. Each of the Stockholders hereby agrees that each outstanding certificate representing Shares shall bear a conspicuous legend reading substantially as follows: "The securities represented by this Certificate have not been registered under the Securities Act of 1933 or the applicable state and other securities laws and may not be sold, pledged, hypothecated, encumbered, disposed of or otherwise transferred without compliance with the Securities Act of 1933 or any exemption thereunder and applicable state and other securities laws. The securities represented by this Certificate are subject to the restrictions on transfer and other provisions of a Stockholders Agreement dated as of April 12, 1999, (as amended from time to time, the "Agreement") by and among Packing Corporation of America (the "Company") and certain of its stockholders, and may not be sold, pledged, hypothecated, encumbered, disposed of or otherwise transferred except in accordance therewith. A copy of the Agreement is on file at the principal executive offices of the Company. -17- 19 ARTICLE VII RIGHTS ON NEW SECURITY ISSUANCE 7.1 PREEMPTIVE RIGHTS. Newco hereby grants to each Stockholder the irrevocable and exclusive first option (the "FIRST OPTION") to purchase all or part of its Pro Rata Portion of any New Securities which Newco may, from time to time after the date of this Agreement, propose to issue and sell or otherwise transfer. 7.2 NOTICES WITH RESPECT TO PROPOSED ISSUANCE OF NEW SECURITIES. In the event Newco proposes to undertake an issuance or other transfer of New Securities, it shall give each Stockholder entitled to a First Option pursuant to this ARTICLE VII written notice (the "COMPANY NOTICE") of its intention, describing in detail the type of New Securities, the price and the terms upon which Newco proposes to issue or otherwise transfer such New Securities. Each such Stockholder shall have 10 Business Days from the date of receipt of any such Company Notice to agree to purchase, pursuant to the exercise of the First Option, up to such Stockholder's Pro Rata Portion of each type and class and series of such New Securities (i.e., the same strips) for the price and upon the terms and conditions specified in the Company Notice by giving written notice to Newco and stating therein the quantity of New Securities to be purchased. 7.3 COMPANY'S RIGHT TO COMPLETE PROPOSED SALE OF NEW SECURITIES TO THE EXTENT PREEMPTIVE RIGHTS ARE NOT EXERCISED. In the event the Stockholders fail to exercise a preemptive right with respect to any New Securities within The periods specified in SECTION 7.2, Newco shall have 90 days thereafter to sell or enter into an agreement (pursuant to which the sale of such New Securities shall be closed, if at all, within 45 days from the date of said agreement) to sell the New Securities not elected to be purchased by the Stockholders at the price and upon terms not substantially more favorable to the prospective purchasers of such securities than those specified in Newco Notice. In the event Newco has not sold the New Securities or entered into an agreement to sell the New Securities within said 90-day period. Newco shall not thereafter issue or sell or otherwise transfer such New Securities without first offering such securities to the Stockholders in the manner provided in this ARTICLE VII. 7.4 CLOSING OF PURCHASE. If a Stockholder elects to purchase up to its Pro Rata Portion of any New Securities set forth in any Company Notice, such purchase shall be consummated at such time and at such location selected by Newco upon reasonable advance notice. At the consummation of any purchase and sale of New Securities pursuant to this ARTICLE VII: (i) Newco shall issue or otherwise transfer to the Stockholder the certificates evidencing the New Securities being purchased, together with such other documents or instruments reasonably required by counsel for the Stockholder to consummate such purchase and sale; (ii) the Stockholder will deliver the cash consideration payable by wire transfer of immediately available funds to an account or accounts designated in writing by Newco (such designation to be made no later than two Business Days prior to the date of such consummation); (iii) Newco shall deliver to the Stockholder a written representation that the New Securities are being purchased and sold free and clear of any and all Encumbrances; and (iv) the Stockholder shall deliver to Newco such written investment representations as may reasonably be required by counsel to Newco for securities Laws purposes and -18- 20 all other applicable representations and warranties as other purchasers of New Securities. Notwithstanding the foregoing, any purchase of New Securities pursuant to this Article VII shall be on the same terms and conditions as set forth in the Company Notice. ARTICLE VIII TERM 8.1 TERM. Subject to the next sentence, unless earlier terminated by mutual agreement of TPI and PCA, this Agreement shall terminate upon the earliest to occur of: (i) the complete liquidation or dissolution of Newco or its Subsidiaries; (ii) a Public Offering; (iii) such date as TPI and its Affiliates first hold less than 17-1/2% of Newco's outstanding Common Stock or; (iv) the acquisition of all or substantially all of the stock or assets of TPI (whether by stock sale, asset sale, merger, consolidation, combination or otherwise) by a Person engaged, directly or indirectly, in a business within the Business Scope with annual revenues from such business in excess of $100 million; provided; however, that in the case of termination pursuant to clause (iv), TPI (or its successor in interest) shall (unless or until this Agreement is terminated pursuant to clauses (i)-(iii)) have the right at each election of directors to designate as the two TPI Directors of Newco and each Subsidiary who are not directors, officers, employees or affiliates of such Person and are approved by PCA, such approval not to be unreasonably withheld; provided, further, that in case of any termination pursuant to this SECTION 8.1, unless otherwise determined by PCA, this Agreement shall nevertheless remain in full force and effect with respect to the drag-along provisions set forth in SECTION 6.4 and all related definitions and provisions to the extent necessary or desirable to give full force and effect to SECTION 6.4. The rights of each of TPI and PCA to terminate this Agreement by mutual agreement and the right of PCA to terminate this Agreement with respect to the drag-along provisions of SECTION 6.4 are not assignable by TPI or PCA, and shall not inure to the benefit of any transferee, successor or assign of TPI or TPI, other than to an Affiliate of such party who is (or becomes) a Stockholder, without the prior written consent of the other. Upon the termination of this Agreement pursuant to clauses (i)-(iv) (regardless of whether certain provisions of this Agreement survive such termination), TPI shall sell the 45 shares of Junior Preferred Stock held by it to PCA for the fair market value thereof, as determined by the auditors of Newco. ARTICLE IX MISCELLANEOUS 9.1 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been given if: (i) delivered in person (to the individual whose attention -19- 21 is specified below) or via facsimile (followed immediately with a copy in the manner specified in clause (ii) hereof); (ii) sent by prepaid first-class registered or certified mail, return receipt requested; or (iii) sent by recognized overnight courier service, as follows: to Newco: Packaging Corporation of America 1900 West Field Court Lake Forest, IL 60045 Attention: Chief Executive Officer to TPI: Tenneco Packaging Inc. 1900 West Field Court Lake Forest, IL 60045 Attention: President Facsimile: (847) 482-4589 with a copy to: Tenneco Packaging Inc. 1900 West Field Court Lake Forest, IL 60045 Attention: General Counsel Facsimile: (847) 482-4589 with a copy to: Jenner & Block One IBM Plaza Chicago, Illinois 60611 Attention: Timothy R. Donovan Facsimile: (312) 840-7271 to PCA: PCA Packaging LLC c/o Madison Dearborn Partners, Inc. Three First National Plaza Suite 3800 Chicago, IL 60602 Attention: Samuel M. Mencoff Justin S. Huscher Facsimile: (312) 895-1056 -20- 22 with a copy to: Kirkland & Ellis 200 E. Randolph Drive Chicago, IL 60601 Attention: William S. Kirsch, P.C. Facsimile: (312) 861-2200 to other Stockholders: To the address which appears on the books and records of Newco or to such other address as any party hereto may, from time to time, designate in a written notice given in like manner. All notices and other communications hereunder shall be effective: (i) the day of delivery when delivered by hand, facsimile or overnight courier; and (ii) three Business Days from the date deposited in the mail in the manner specified above. 9.2 AMENDMENT; WAIVER. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed: (i) in the case of an amendment, by: (A) Newco; (B) Stockholders holding a majority of the Shares of Common Stock held by the TPI Holders; (C) Stockholders holding a majority of the Shares of Common Stock held by PCA Holders; and (D) by each of PCA and TPI (in each case only so long as such Person or any of its Affiliates is a Stockholder); or (ii) in the case of a waiver, by the party against whom the waiver is to be effective. The rights of TPI and PCA to consent to a amendment to this Agreement shall not be assignable by TPI or PCA and shall not inure to the benefit of any transferee, successor or assign of TPI or PCA, other than to an Affiliate of such party who is a (or in connection therewith, becomes) Stockholder, without the prior written consent of the other. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. Except as otherwise provided herein, the rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 9.3 ASSIGNMENT. Except as otherwise expressly provided herein, no party to this Agreement may assign any of its rights or obligations under this Agreement without the prior written consent of the other parties hereto. 9.4 ENTIRE AGREEMENT. This Agreement (including the exhibits hereto), contains the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters. 9.5 PUBLIC DISCLOSURE. Each of the parties hereby agrees that, except as may be required to comply with the requirements of any applicable Laws or the rules and regulations of any stock exchange upon which its securities (or the securities of one of its Affiliates) are traded, it shall -21- 23 not make or permit to be made any press release or similar public announcement or communication concerning the execution or performance of this Agreement unless specifically approved in advance by all parties hereto. In the event, however, that legal counsel for any party is of the opinion that a press release or similar public announcement or communication is required by Law or by the rules and regulations of any stock exchange on which such party's securities (or the securities of one of such party's Affiliates) are traded, then such party may issue a public announcement limited solely to that which legal counsel for such party advises is required under such Law or such rules and regulations (and the party making any such announcement shall provide a copy thereof to the other party for review before issuing such announcement). 9.6 PARTIES IN INTEREST. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer upon any Person other than Newco, TPI, PCA or their respective successors or permitted assigns, any rights or remedies under or by reason of this Agreement. 9.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to its principles of conflicts of laws. Each party hereto agrees that it shall bring any action or proceeding in respect of any claim arising out of or related to this agreement or the transactions contained in or contemplated by this agreement, whether in tort or contract or at law or in equity, exclusively in any United States federal court or any state court located in the State of Illinois (the "CHOSEN COURTS") and: (i) irrevocably submits to the exclusive jurisdiction of the Chosen Courts; (ii) waives any objection to laying venue in any such action or proceeding in the Chosen Courts; (iii) waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party hereto; and (iv) agrees that service of process upon such party in any such action or proceeding shall be effective if notice is given in accordance with SECTION 9.1 of this Agreement. 9.8 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement. 9.9 SEVERABILITY. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof or thereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable: (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision; and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. -22- 24 9.10 HEADINGS. The heading references and the table of contents herein are for convenience purposes only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. 9.11 EQUITABLE RELIEF. Each party acknowledges that money damages would be inadequate to protect against any actual or threatened breach of this Agreement by any party and that each party shall be entitled to equitable relief, including specific performance and/or injunction, without posting bond or other security in order to enforce or prevent any violations of the provisions of this Agreement. 9.12 NO PARTNERSHIP. This Agreement shall not constitute an appointment of any party as the agent of any other party, nor shall any party have any right or authority to assume, create or incur in any manner any obligation or other liability of any kind, express or implied, against, in the name or on behalf of, any other party. Nothing herein or in the transactions contemplated by this Agreement shall be construed as, or deemed to be, the formation of a partnership by or among the parties hereto. * * * * -23- 25 IN WITNESS WHEREOF, the parties have executed or caused this Agreement to be executed as of the date first written above. TENNECO PACKAGING INC. By: /s/ James V. Faulkner, Jr. ------------------------------- Name: James V. Faulkner, Jr. Title: Vice President PCA HOLDINGS LLC By: /s/ Samuel M. Mencoff ------------------------------- Name: Samuel M. Mencoff Title: Managing Director PACKAGING CORPORATION OF AMERICA By: /s/ Richard B. West ------------------------------- Name: Richard B. West Title: Secretary -24- EX-10.33 4 REGISTRATION AGREEMENT 1 EXHIBIT 10.33 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement ("AGREEMENT") is made as of this 12th day of April, 1999 by and among Tenneco Packaging Inc., a Delaware corporation ("TPI"), PCA Holdings LLC, a Delaware limited liability company ("PCA"), and Packaging Corporation of America, a Delaware corporation ("NEWCO"). PRELIMINARY RECITALS 1. TPI, PCA and Newco are parties to that certain Contribution Agreement, dated as of January 25, 1999, as amended (the "CONTRIBUTION AGREEMENT"), relating to the organization, ownership and management of Newco and certain other matters. 2. As an inducement to TPI and PCA to enter into and consummate the transactions contemplated by the Contribution Agreement, Newco has agreed to provide certain registration rights to TPI and PCA and transferees (to the extent provided herein) of their equity securities of Newco as provided herein. NOW, THEREFORE, the parties hereto AGREE as follows: 1. CERTAIN DEFINITIONS. "COMMON STOCK" means the common stock, par value $.01 per share, of Newco. "PERSON" means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, a limited liability company or other unincorporated organization, and a governmental entity or any department, agency or political subdivision thereof. "PIK SECURITIES" means the preferred stock of Newco with a pay-in-kind feature, as described in the Commitment Letters (as such term is defined in the Contribution Agreement). "REGISTRABLE SECURITIES" means, as of any date: (i) Common Stock and PIK Securities issued pursuant to the Contribution Agreement to TPI, PCA or any of their respective Affiliates on the date hereof; and (ii) any Common Stock or PIK Securities issued or issuable with respect to the Common Stock or PIK Securities in the preceding clause (i) by way of or in connection with a stock dividend, stock split, combination of shares, share subdivision, share exchange, recapitalization, merger, consolidation or other reorganization or transaction (including without limitation any PIK Securities issued pursuant to the terms of PIK Securities). As of any date, Registrable Securities owned by TPI or any of its Affiliates are sometimes referred to herein as "TPI REGISTRABLE SECURITIES." As of any date, Registrable Securities owned by PCA, by its members which are members of PCA as of the date hereof or by any of their Affiliates are sometimes referred to herein as "PCA REGISTRABLE SECURITIES." As of any date, Registrable Securities owned by any direct or indirect transferee of TPI (other than an Affiliate of TPI) or by any direct or indirect transferee of PCA (other than an Affiliate of PCA or member of PCA as of the date hereof) are sometimes referred to herein as "TRANSFEREE REGISTRABLE SECURITIES." As to any particular 2 Registrable Securities, such securities will cease to be Registrable Securities when they have been distributed to the public pursuant to a offering registered under the Securities Act of 1933, as amended from time to time (the "SECURITIES ACT"), or distributed to the public in compliance with Rule 144 under the Securities Act. For purposes of this Agreement, a Person will be deemed to be a holder of Registrable Securities whenever such Person has the right to acquire directly or indirectly such Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected. "REGISTRATION EXPENSES" means any and all expenses incident to performance of, or compliance with any registration of securities pursuant to, this Agreement, including, without limitation: (i) the fees, disbursements and expenses of Newco's counsel and accountants; (ii) the fees, disbursements and expenses of one or more firms, as applicable pursuant to the terms of this Agreement, selected as counsel for the holders of the Registrable Securities in connection with the registration of the securities to be disposed of; (iii) all expenses, including registration and filing fees, in connection with the preparation, printing, filing and distribution of the registration statement, any preliminary prospectus or final prospectus, term sheets and any other offering documents, and amendments and supplements thereto, and the mailing and delivering of copies thereof to any underwriters and dealers; (iv) the cost of printing or producing any underwriting agreements and blue sky or legal investment memoranda, and any other documents in connection with the offering, sale or delivery of the securities to be disposed of; (v) all expenses in connection with the qualification of the securities to be disposed of for offering and sale under state securities laws, including the fees, disbursements and expenses of counsel for the underwriters or the holders of the Registrable Securities in connection with such qualification and in connection with any blue sky and legal investment surveys; (vi) the filing fees incident to securing any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the securities to be disposed of; (vii) transfer agents' and registrars' fees and expenses and the fees and expenses of any other agent or trustee appointed in connection with such offering; (viii) all security engraving and security printing expenses; (ix) all fees, disbursements and expenses payable in connection with the listing of the securities on any securities exchange or automated interdealer quotation system and the rating of such securities; (x) any other fees, disbursements and expenses of underwriters customarily paid by the sellers of securities (excluding underwriting discounts and commissions); (xi) all liability insurance expense; and (xii) other out-of-pocket expenses of the holders of the Registrable Securities participating in such registration. Notwithstanding the foregoing, each holder of the Registrable Securities and Newco shall be responsible for its own internal administrative and similar costs. 2. DEMAND REGISTRATIONS. (a) GENERAL. At any time and from time to time, upon written notice from either the holders of at least 75% of the TPI Registrable Securities or the holders of at least 75% of the PCA Registrable Securities requesting that Newco effect the registration under the Securities Act of any or all the TPI Registrable Securities or the PCA Registrable Securities, respectively, Newco shall effect the registration (under the Securities Act and applicable state securities laws) of such securities (and other Registrable Securities subject to Sections 2(c) and 2(d) below) in accordance with such notice, Section 5 below and the other provisions of this Agreement. The notice shall -2- 3 specify the approximate number of Registrable Securities to be registered and the expected per share price range for the offering. A registration pursuant to this Section 2 is sometimes referred to herein as a "DEMAND REGISTRATION." (b) LIMITATIONS ON DEMAND REGISTRATIONS; DEMAND REGISTRATION FORMS AND EXPENSES. The holders of the TPI Registrable Securities, on the one hand, and the holders of the PCA Registrable Securities, on the other hand, each shall be entitled to separately request pursuant to this Section 2: (i) three (3) effected registrations on Form S-1 or any similar or successor long form registration including, without limitation, Form A contemplated by the Securities and Exchange Commission ("SEC") in Release No. 33-7606 dated October 15, 1998 (the "AIRCRAFT CARRIER RELEASE") ("LONG-FORM REGISTRATIONS") in which Newco shall pay all Registration Expenses; (ii) an unlimited number of registrations on Form S-2 or S-3 or any similar or successor short form registration including, without limitation, Form B contemplated by the SEC in the Aircraft Carrier Release ("SHORT-FORM REGISTRATIONS") in which Newco shall pay all Registration Expenses; and (iii) an unlimited number of Long-Form Registrations in which the holders of the Registrable Securities participating in such registration shall pay all Registration Expenses. For purposes of clause (iii) above, each holder of securities included in accordance with this Agreement in any registration pursuant to clause (iii) shall pay those Registration Expenses allocable to the registration of such holder's securities so included, and any Registration Expenses not so allocable will be borne by all sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered. Newco shall pay and be solely responsible for Registration Expenses with respect to registrations effected under clause (i) and (ii) above. After Newco has become subject to the Securities Exchange Act of 1934, as amended from time to time ("EXCHANGE ACT"), Newco will use its reasonable best efforts to make Short-Form Registrations available for the sale of Registrable Securities. Demand Registrations will be Short-Form Registrations whenever Newco is permitted to use any applicable short form; provided, however, that Newco shall nevertheless use a Long-Form Registration Statement in the event that both: (i) the use of a Short-Form Registration Statement would limit the offering to existing security holders, qualified institutional buyers or other classes of offerees or would otherwise, in the opinion of the managing underwriters, have an adverse effect on the offering under the Securities Act and regulations thereunder as then in effect; and (ii) the holders of 90% of the TPI Registrable Securities or PCA Registrable Securities, as the case may be, initially requesting the Demand Registration direct in such request that Newco utilize a Long-Form Registration Statement. -3- 4 Notwithstanding any other provision of this Agreement to the contrary, a registration requested hereunder shall not be deemed to have been effected: (i) unless it has become and remains effective for the period specified in Section 5(b); (ii) if after it has become effective such registration is interfered with by any stop order, injunction or other order or requirement of the Securities and Exchange Commission ("SEC") or other governmental agency or court for any reason other than due solely to the fault of the holders of the Registrable Securities participating therein and, as a result thereof, the Registrable Securities requested to be registered cannot be completely distributed in accordance with the plan of distribution set forth in the registration statement; or (iii) if the conditions to closing specified in any purchase agreement or underwriting agreement entered into in connection with any such registration are not satisfied or waived other than due solely to the fault of the holders of the Registrable Securities participating therein. In addition, a Demand Registration initially requested by the holders of the TPI Registrable Securities shall not be deemed to have been effected if the holders of the TPI Registrable Securities are unable, as a result of the priority provisions in Section 2(d) below, to sell at least 90% of the TPI Registrable Securities initially requested to be included in such registration. Similarly, a Demand Registration initially requested by the holders of the PCA Registrable Securities shall not be deemed to have been effected if the holders of the PCA Registrable Securities are unable, as a result of the priority provisions in Section 2(d) below, to sell at least 90% of the PCA Registrable Securities initially requested to be included in such registration. (c) NOTICE TO OTHER HOLDERS; SELECTION OF UNDERWRITER AND HOLDER'S COUNSEL. Within five (5) days after receipt of a request for a Demand Registration, Newco will give prompt written notice (in any event within five (5) days after its receipt of notice of any exercise of Demand Registration rights under this Agreement) of such request to all other holders of Registrable Securities, and subject to Section 2(d) below, will include within such registration all Registrable Securities with respect to which Newco has received written requests for inclusion therein within fifteen (15) days after receipt of Newco's notice. The holders of a majority of the TPI Registrable Securities or PCA Registrable Securities, as applicable, submitting the initial request (i.e. excluding the holders submitting requests after Newco's notice) shall have the right to select the investment bankers and managers for the offering, subject to the approval of the other holders of the TPI Registrable Securities and PCA Registerable Securities, if any, participating in such registration pursuant to this Agreement, which approval shall not be unreasonably withheld. Counsel for all holders of Registrable Securities in connection with such registration shall be selected: (i) by the holders of a majority of the TPI Registrable Securities, if holders of the TPI Registrable Securities make the initial registration request; or (ii) by the holders of a majority of the PCA Registrable Securities, if the holders of the PCA Registrable Securities make the initial registration request; provided, however, if the holders of a majority of the PCA Registrable Securities, on the one hand, and a majority of the TPI Registrable Securities, on the other hand, reasonably conclude, after consultation with the other, that such representation is likely to result in a conflict of interest or materially adversely affect either group's rights in connection with such registration, then the holders of a majority of the PCA Registrable Securities and the holders of a majority of the TPI Registrable Securities, respectively, shall each be entitled to select a separate firm to represent them as counsel in connection with such registration. The fees and expenses of such firm or firms acting as counsel for the holders of the Registrable Securities shall be paid by -4- 5 Newco. (d) PRIORITY ON DEMAND REGISTRATIONS. Newco shall not include in any Demand Registration any securities which are not Registrable Securities without the prior written consent of the holders of at least 90% of the Registrable Securities included in such registration. If a Demand Registration is an underwritten offering and the managing underwriters advise Newco in writing that in their opinion the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold in an orderly manner in such offering within a price range acceptable to the holders of a majority of the TPI Registrable Securities or PCA Registrable Securities, as applicable, initially requesting registration, Newco will include in such registration: (A) if requested by the holders of the TPI Registrable Securities or by the holders of the PCA Registrable Securities at any time during the 14-month period commencing on the date hereof (the "SPECIAL PRIORITY PERIOD"), only the number of Registrable Securities which such underwriters advise in writing can be sold in such manner and within such price range in the following order of priority: (i) first, the TPI Registrable Securities, if any, requested to be included therein, pro-rata among the holders of such TPI Registrable Securities on the basis of the number of shares requested to be included by each such holder; (ii) second, the PCA Registrable Securities, if any, requested to be included therein, pro-rata among the holders of such PCA Registrable Securities on the basis of the number of shares requested to be included by each such holder; (iii) third, the Transferee Registrable Securities, if any, requested to be included therein, pro-rata among the holders of such Transferee Registrable Securities on the basis of the number of shares requested to be included by each such holder; and (iv) fourth, any other securities requested to be included in such registration; and (B) if requested by the holders of the TPI Registrable Securities or by the holders of the PCA Registrable Securities at any time after the Special Priority Period, only the number of Registrable Securities which such underwriters advise in writing can be sold in such manner and within such price range in the following order of priority: -5- 6 (i) first, the TPI Registrable Securities and the PCA Registrable Securities requested to be included therein, pro-rata among the holders of such Registrable Securities on the basis of the number of shares requested to be included by each such holder; (ii) second, the Transferee Registrable Securities, if any, requested to be included therein, pro-rata among the holders of such Transferee Registrable Securities on the basis of the number of shares requested to be included by each such holder; and (iii) third, any other securities requested to be included in such registration. (e) RESTRICTIONS ON DEMAND REGISTRATIONS. Newco will not be obligated to effect any Demand Registration within 90 days after the effective date of a previous Demand Registration or previous registration in which holders of Registrable Securities were given piggyback rights pursuant to Section 3 at an offering price acceptable to the holders of the Registrable Securities and in which there was no reduction in the number of Registrable Securities requested to be included. Additionally, Newco may postpone for up to 90 days (on not more than one occasion during any 12-month period) the filing or the effectiveness of a registration statement for a Demand Registration if, based on the advice of counsel, Newco reasonably determines that such Demand Registration would likely have an adverse effect on any proposal or plan by Newco to engage in any acquisition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer or similar transaction; provided, however, that in such event, the holders of Registrable Securities initially requesting such Demand Registration will be entitled to withdraw such request and, if such request is withdrawn, such Demand Registration will not count as one of the permitted Demand Registrations hereunder and Newco will pay all Registration Expenses in connection with such registration. (f) OTHER REGISTRATION RIGHTS. Newco will not register for the benefit of any Person other than TPI, PCA or their respective direct or indirect transferees, or grant to any such other Person the right to request Newco to register or to participate in Piggyback Registrations with respect to, any equity securities of Newco, or any securities convertible or exchangeable into or exercisable for such securities, without the prior written consent of both (i) TPI, as long as it or any of its Affiliates owns any TPI Registrable Securities and (ii) PCA, as long as it or any of its Affiliates owns any PCA Registrable Securities. 3. PIGGYBACK REGISTRATIONS. (a) GENERAL; NOTICE TO HOLDERS. In addition to the registration rights in Section 2 above, whenever Newco proposes to register any of its securities under the Securities Act (other than pursuant to a Demand Registration hereunder) and the registration form to be used may be used for the registration of Registrable Securities, Newco will give prompt written notice (in any event within five (5) days after its receipt of notice of any exercise of demand registration rights other than under this Agreement) to all holders of Registrable Securities of its intention to effect such a registra- -6- 7 tion. Subject to Sections 3(c) and 3(d) below, Newco shall include in such registration all Registrable Securities with respect to which Newco has received written requests for inclusion therein within fifteen (15) days after the receipt of Newco's notice. Registrations under this Section 3 are sometimes referred to herein as "PIGGYBACK REGISTRATIONS." (b) NUMBER OF PIGGYBACK REGISTRATIONS; PIGGYBACK REGISTRATION EXPENSES. The holders of the Registrable Securities shall be entitled to participate in an unlimited number of Piggyback Registrations. The Registration Expenses of the holders of Registrable Securities will be paid by Newco in all Piggyback Registrations. (c) PRIORITY ON PRIMARY PIGGYBACK REGISTRATIONS. SUBJECT To Section 3(f) below, if a Piggyback Registration is an underwritten primary registration on behalf of Newco, and the managing underwriters advise Newco in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to Newco, Newco will include in such registration: (A) in the case of a registration with respect to which Newco has provided notice under Section 3(a) above at any time during the Special Priority Period, only the number of securities (including Registrable Securities) which such underwriters advise in writing can be sold in such manner and within such price range in the following order of priority: (i) first, the securities Newco proposes to sell; (ii) second, the TPI Registrable Securities, if any, requested to be included therein, pro-rata among the holders of such TPI Registrable Securities on the basis of the number of shares requested to be included by each such holder; (iii) third, the PCA Registrable Securities, if any, requested to be included therein, pro-rata among the holders of such PCA Registrable Securities on the basis of the number of shares requested to be included by each such holder; (iv) fourth, the Transferee Registrable Securities, if any, requested to be included therein, pro-rata among the holders of such Transferee Registrable Securities on the basis of the number of shares requested to be included by each such holder; and (v) fifth, any other securities requested to be included in such registration; and (B) in the case of a registration with respect to which Newco has provided notice under Section 3(a) above at any time after the Special Priority Period, only the -7- 8 number of securities (including Registrable Securities) which such underwriters advise in writing can be sold in such manner and within such price range in the following order of priority: (i) first, the securities Newco proposes to sell; (ii) second, the TPI Registrable Securities and the PCA Registrable Securities, if any, requested to be included therein, pro-rata among the holders of such Registrable Securities on the basis of the number of shares requested to be included by each such holder; (iii) third, the Transferee Registrable Securities, if any, requested to be included therein, pro-rata among the holders of such Transferee Registrable Securities on the basis of the number of shares requested to be included by each such holder; and (iv) fourth, any other securities requested to be included in such registration. (d) PRIORITY ON SECONDARY PIGGYBACK REGISTRATIONS. Subject to Section 3(f) below, if a Piggyback Registration is an underwritten secondary registration on behalf of holders of Newco's securities, and the managing underwriters advise Newco in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the holders initially requesting such registration, Newco will include in such registration: (A) in the case of a registration with respect to which Newco has provided notice under Section 3(a) above at any time during the Special Priority Period, only the number of securities (including Registrable Securities) which can be sold in such manner and within such price range in the following order of priority: (i) first, the securities requested to be included therein by the holders requesting such registration and the TPI Registrable Securities, if any, requested to be included therein, pro-rata among the holders of such securities (including Registrable Securities) on the basis of the number of shares requested to be included by each such holder; (ii) second, the PCA Registrable Securities, if any, requested to be included therein, pro-rata among the holders of such PCA Registrable Securities on the basis of the number of shares requested to be included by each such holder; (iii) third, the Transferee Registrable Securities, if any, requested to be included therein, pro-rata among the holders of such Transferee Registrable Securities on the basis of the number of shares requested -8- 9 to be included by each such holder; and (iv) fourth, any other securities requested to be included in such registration; and (B) in the case of a registration with respect to which Newco has provided notice under Section 3(a) above at any time after the Special Priority Period, only the number of securities (including Registrable Securities) which can be sold in such manner and within such price range in the following order of priority: (i) first, the securities requested to be included therein by the holders requesting such registration, the TPI Registrable Securities, if any, requested to be included therein, and the PCA Registrable Securities, if any, requested to be included therein, pro-rata among the holders of such securities (including Registrable Securities) on the basis of the number of shares requested to be included by each such holder; (ii) second, the Transferee Registrable Securities, if any, requested to be included therein, pro-rata among the holders of such Transferee Registrable Securities on the basis of the number of shares requested to be included by each such holder; and (iii) third, any other securities requested to be included in such registration. (e) SELECTION OF UNDERWRITER AND HOLDER'S COUNSEL. If any Piggyback Registration is an underwritten offering, the selection of investment bankers and managers for the offering must be approved by the holders of a majority of the Registrable Securities included in such Piggyback Registration. Such approval will not be unreasonably withheld. The holders of the TPI Registrable Securities and the PCA Registrable Securities shall have the right to select one or two firms as counsel as provided in Section 2(c) above, the fees and expenses of which shall be paid by Newco. (f) OTHER REGISTRATIONS. If Newco has been requested by the holders of Registrable Securities to file a registration statement pursuant to Section 2 above or if it has filed a Registration Statement pursuant to this Section 3, and if such previous request or registration has not been withdrawn or abandoned, Newco will not file or cause to be effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Form S-8 or any successor form), whether on its own behalf or at the request of any holder or holders of such securities, until the expiration of the effectiveness period required under Section 5(b) below. -9- 10 4. HOLDBACK AGREEMENTS. (a) AGREEMENT BY HOLDERS. Each holder of Registrable Securities agrees not to effect any public sale or distribution (including sales pursuant to Rule 144 under the Securities Act) of equity securities of Newco, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and the 180-day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration in which Registrable Securities are included (except as part of such underwritten registration), unless the underwriters managing the registered public offering otherwise agree. (b) AGREEMENTS BY NEWCO. Newco agrees: (i) not to effect or facilitate any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the thirty days prior to and during the 180-day period beginning on the effective date of any underwritten Demand Registration or Piggyback Registration (except as part of such underwritten Piggyback Registration or pursuant to registrations on Form S-8 or any successor form), unless the underwriters managing the registered public offering (and in the case of a Demand Registration, the holders of a majority of the Registrable Securities included therein) otherwise agree; and (ii) to cause Newco's directors, officers and affiliates not to effect or facilitate any public sale or distribution (including sales pursuant to Rule 144 under the Securities Act) of any equity securities, or any securities convertible into or exchangeable or exercisable for such securities during such period (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the registered public offering, the holders of a majority of the TPI Registrable Securities participating in such registration and the holders of a majority of the PCA Registrable Securities participating in such registration otherwise agree. 5. REGISTRATION AND QUALIFICATION. If and whenever Newco is required to effect the registration of any Registrable Securities, Newco shall as promptly as possible: (a) prepare, file and use its reasonable best efforts to cause to become effective a registration statement under the Securities Act relating to the Registrable Securities to be offered and effect the sale of such Registrable Securities, in each case in accordance with the intended method of disposition thereof (Newco shall cause such registration statement to be effective as promptly as possible but in any event within 120 days of the request); (b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities included therein until the earlier of: (i) such time as all of such Registrable Securities included therein have been disposed of in accordance with the intended methods of disposition; and (ii) the expiration of 180 days after such registration statement becomes effective; provided, that such 180-day period shall be extended for such number of days that equals the number of days elapsing from (x) the date the written notice contemplated by paragraph 5(g) below is given by Newco to (y) the date on which Newco delivers to the holders of the Registrable Securities included in such registration statement the supplement or amendment contemplated by paragraph 5(g) below; -10- 11 (c) provide copies of all registration statements, prospectus and amendments and supplements to each firm selected by the holders of the Registrable Securities in accordance with this Agreement at least ten days prior to the filing thereof (if practicable, at least one day in the case of an amendment or supplement prepared pursuant to Section 5(g) below), with such counsel being provided with the opportunity (but not the obligation) to review and comment on such documents; (d) furnish to the holders of the Registrable Securities included in such registration statement and to any underwriter of such Registrable Securities such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus) in conformity with the requirements of the Securities Act, such documents incorporated by reference in such registration statement or prospectus, such number of other offering documents, copies of any and all transmittal letters or other correspondence to or received from, the SEC or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering, and such other documents, as the holders of such Registrable Securities or such underwriter may reasonably request; (e) use its reasonable best efforts to register or qualify all Registrable Securities covered by such registration statement under the securities or blue sky laws of such jurisdictions as the holders of the Registrable Securities included in such registration statement or any underwriter of such Registrable Securities shall request, and use its reasonable best efforts to obtain all appropriate registrations, permits and consents in connection therewith, and do any and all other acts and things which may be necessary or advisable to enable such holders of such Registrable Securities or any such underwriter to consummate the disposition in such jurisdictions of its Registrable Securities covered by such registration statement; (f) furnish to the holders of the Registrable Securities included in such registration statement and to any underwriter of such Registrable Securities: (i) an opinion of counsel for Newco addressed to the holders of such Registrable Securities and dated the date of the closing under the underwriting agreement (if any) (or if such offering is not underwritten, dated the effective date of the registration statement); and (ii) a "cold comfort" letter addressed to the holders of such Registrable Securities and signed by the independent public accountants who have audited the financial statements of Newco included in such registration statement, in each such case covering substantially the same matters with respect to such registration statement (and the prospectus included therein) as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to underwriters in underwritten public offerings of securities and such other matters as the holders of such Securities may reasonably request and, in the case of such accountants' letter, with respect to events subsequent to the date of such financial statements; (g) as promptly as practicable, notify the holders of the Registrable Securities included in such registration statement in writing: (i) at any time when a prospectus relating to a registration statement hereunder is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact -11- 12 required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and (ii) of any request by the SEC or any other regulatory body or other body having jurisdiction for any amendment of or supplement to any registration statement or other document relating to such offering, and in either such case, prepare and furnish to the holders of such Registrable Securities a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading; (h) cause all such Registrable Securities included in such registration statement to be listed on each securities exchange on which similar securities issued by Newco are then listed and, if not so listed, to be listed on the New York Stock Exchange; (i) furnish for delivery in connection with the closing of any offering of Registrable Securities pursuant to a registration hereunder unlegended certificates representing ownership of the Registrable Securities being sold in such denominations as shall be requested by the holders of the Registrable Securities or the underwriters; (j) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement; (k) enter into such customary agreements and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including effecting a stock split or a combination of shares); (l) otherwise use its best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of Newco's first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; (m) permit any holder of Registrable Securities which holder, in its sole and exclusive judgment, might be deemed to be an underwriter or a controlling person of Newco, to participate in the preparation of such registration statement and to require the insertion therein of material, furnished to Newco in writing, which in the reasonable judgment of such holder and its counsel should be included; and (n) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Common Stock included in such registration statement for sale in any jurisdiction, Newco will use its reasonable best efforts promptly to obtain the withdrawal of -12- 13 such order. If any such registration or comparable statement refers to any holder of Registrable Securities by name or otherwise as the holder of any securities of Newco and if in its sole and exclusive judgment, such holder is or might be deemed to be a controlling person of Newco, such holder will have the right to require: (i) the insertion therein of language, in form and substance satisfactory to such holder and presented to Newco in writing, to the effect that the holding by such holder of such securities is not to be construed as a recommendation by such holder of the investment quality of Newco's securities covered thereby and that such holding does not imply that such holder will assist in meeting any future financial requirements of Newco; or (ii) in the event that such reference to such holder by name or otherwise is not required by the Securities Act or any similar federal statute then in force, the deletion of the reference to such holder; provided that with respect to this clause (ii) such holder will furnish to Newco an opinion of counsel to such effect. 6. RECAPITALIZATION; UNDERWRITING; DUE DILIGENCE. (a) For any Piggyback Registration or Demand Registration prior to the time Newco becomes subject to the Exchange Act with respect to Registrable Securities, Newco shall effect a stock split, stock dividend or stock combination which in the opinion of the underwriters is desirable for the sale and marketing of the Registrable Securities to the public. (b) If requested by the underwriters for any underwritten offering of Registrable Securities pursuant to a registration requested under this Agreement, Newco shall enter into an underwriting agreement with such underwriters for such offering, which agreement will contain such representations and warranties by Newco and such other terms and provisions as are customarily contained in underwriting agreements of Newco to the extent relevant and as are customarily contained in underwriting agreements generally with respect to secondary distributions to the extent relevant, including, without limitation, indemnification and contribution provisions substantially to the effect and to the extent provided in Section 7(a), and agreements as to the provision of opinions of counsel and accountants' letters to the effect and to the extent provided in Section 5(f). Subject to Section 9 below, the holders of the Registrable Securities included in such registration shall be parties to any such underwriting agreement and the representations and warranties by, and the other agreements on the part of, Newco to and for the benefit of such underwriters, shall also be made to and for the benefit of the holders of such Registrable Securities. (c) In connection with the preparation and filing of each registration statement registering Registrable Securities under the Securities Act pursuant to this Agreement, Newco shall give the holders of the Registrable Securities included in such registration and the underwriters, if any, and their respective counsel, accountants and agents, the opportunity (but such persons shall not have the obligation) to review the books and records of Newco and to discuss the business of Newco with its officers and the independent public accountants who have certified the financial statements of Newco as shall be necessary, in the opinion of the holders of such Registrable Securities and such underwriters or their respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act. -13- 14 7. INDEMNIFICATION. (a) NEWCO INDEMNIFICATION. Newco agrees to indemnify, to the extent permitted by law, each holder of Registrable Securities, its officers and directors and each Person who controls such holder (within the meaning of the Securities Act) and the officers, directors, affiliates, employees and agents of each of the foregoing (whether or not any litigation is commenced or threatened and whether or not such indemnified Persons are parties to any litigation commenced or threatened), against all losses, claims, damages, liabilities and expenses including, without limitation, attorneys' fees, expert fees and amounts paid in settlement, resulting from or arising out of any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to Newco by such holder expressly for use therein or by such holder's failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after Newco has furnished such holder with a sufficient number of copies of the same. In connection with an underwritten offering, Newco will indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the holders of the Registrable Securities or any underwriter and shall survive the transfer of such securities. The foregoing indemnity agreement is in addition to any liability that Newco may otherwise have to the holders of the Registrable Securities or any underwriter of the Registrable Securities or any controlling Person of the foregoing and the officers, directors, affiliates, employees and agents of each of the foregoing. (b) HOLDER INDEMNIFICATION. In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder agrees to indemnify, to the extent permitted by law, Newco, its directors and officers and each Person who controls Newco (within the meaning of the Securities Act) and the officers, directors, affiliates, employees and agents of each of the foregoing (whether or not any litigation is commenced or threatened and whether or not such indemnified Persons are parties to any litigation commenced or threatened), against any losses, claims, damages, liabilities and expenses including, without limitation, attorneys' fees, expert fees and amounts paid in settlement, resulting from or arising out of any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information furnished in writing to Newco by such holder expressly for use in such registration statement; provided, however, that the obligation to indemnify will be individual to each such holder and will be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement. (c) RESOLUTION OF CLAIMS. Any Person entitled to indemnification hereunder will: (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks -14- 15 indemnification hereunder; and (ii) unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. (d) CONTRIBUTION. If the indemnification provided for in this Section 7 shall for any reason be unavailable (other than in accordance with its terms) to an indemnified party in respect of any loss, claim, damage, liability or expense referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage, liability or expense in such proportion as shall be appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other with respect to the statements or omissions which resulted in such loss, claim, damage, liability or expense as well as any other relevant equitable considerations. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the indemnifying party on the one hand or the indemnified party on the other. The amount paid or payable by an indemnified party as a result of the loss, cost, claim, damage, liability or expense, or action in respect thereof, referred to above in this Section 7(d) shall be deemed to include, for purposes of this Section 7(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. In any event, a holder's obligation to provide contribution pursuant to this Section 7(d) shall be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement. (e) STATE SECURITIES LAWS. Indemnification and contribution similar to that specified in the preceding paragraphs of this Section 7 (with appropriate modifications) shall be given by Newco, the holders of the Registrable Securities and underwriters with respect to any required registration or other qualification of securities under any state law or regulation or governmental authority. (f) OTHER RIGHTS. The obligations of the parties under this Section 7 shall be in addition to any liability which any party may otherwise have to any other party. -15- 16 8. RULE 144. Newco shall use its reasonable best efforts to ensure that the conditions to the availability of Rule 144 set forth in paragraph (c) thereof shall be satisfied. Upon the request of the holders of a majority of the TPI Registrable Securities or the holders of a majority of the PCA Registrable Securities, Newco will deliver to such holders a written statement as to whether it has complied with such requirements. 9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No holder of Registrable Securities may participate in any registration hereunder which is underwritten unless such holder: (a) agrees to sell such holder's securities on the basis provided in any underwriting arrangements contemplated by such offering; and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements; provided, however, that no holder of Registrable Securities included in any underwritten registration will be required to make: (i) any representations or warranties to Newco, the underwriters or other Persons other than representations and warranties regarding such holder and such holder's intended method of distribution; or (ii) any indemnities to Newco, the underwriter or other Persons on terms which are not substantially identical to the provisions in Section 7(b) above. 10. MISCELLANEOUS. (a) NO INCONSISTENT AGREEMENTS. Newco represents and warrants to the holders of the Registrable Securities that it has not entered into, and agrees with the holders of the Registrable Securities that it will not hereafter enter into, any agreement with respect to its securities which is inconsistent or conflicts with, or violates the rights granted to the holders of Registrable Securities in, this Agreement. (b) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. In addition to Newco's obligations under Section 6(a) above, Newco will not take any action, or permit any change to occur, with respect to its securities which would adversely affect the ability of the holders of Registrable Securities to include such Registrable Securities in a registration undertaken pursuant to this Agreement or which would adversely affect the marketability of such Registrable Securities in any such registration (including effecting a stock split or a combination of shares). (c) REMEDIES. Each holder of Registrable Securities will have all rights and remedies set forth in this Agreement, Newco's Certificate of Incorporation and all rights and remedies which such holders have been granted at any time under any other agreement and all of the rights which such holders have under any law. Any Person having any rights under any provision of this Agreement will be entitled to enforce such rights specifically, without posting a bond or other security, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. -16- 17 (d) AMENDMENTS; WAIVER. Except as otherwise expressly provided herein, the provisions of this Agreement may be amended and Newco may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if Newco has obtained the written consent of both: (i) TPI, as long as it or any of its Affiliates owns any TPI Registrable Securities; and (ii) PCA, as long as it or any of its Affiliates owns any PCA Registrable Securities. No other course of dealing between Newco and the holder of any Registrable Securities or any delay in exercising any rights hereunder or under the Certificate of Incorporation will operate as a waiver of any rights of any such holders. For purposes of this Agreement, shares held by Newco or any of its Subsidiaries will not be deemed to be Registrable Securities. If Newco pays any consideration to any holder of Registrable Securities for such holder's consent to any amendment, modification or waiver hereunder, Newco will also pay each other holder granting its consent hereunder equivalent consideration computed on a pro rata basis. In the event that the Securities Act, Exchange Act and/or regulations thereunder, respectively, are amended in a material respect and one or more of such amendments reduce or diminish the benefits hereunder to the holders of the Registrable Securities, including, without limitation, amendments which may be adopted in connection with the Aircraft Carrier Release (any such reducing or diminishing amendments being referred to herein as "SECURITIES LAW AMENDMENTS"), Newco shall, upon the written request of both (i) TPI, as long as it or any of its Affiliates owns any TPI Registrable Securities, and (ii) PCA, as long as it or any of its Affiliates owns any PCA Registrable Securities, amend this Agreement to provide the holders of the Registrable Securities with benefits which, after giving effect to such Securities Law Amendments, are equivalent to the benefits hereunder absent such Securities Law Amendments. (e) HEADINGS. The headings in this Agreement are inserted for convenience only and shall not be deemed to define or limit the scope of any section or subsection. (f) NOTICES. All requests, notices, demands or other communications shall be in writing and will be deemed to have been given when delivered to the recipient, when received by facsimile, one (1) business day after the date when sent to the recipient by overnight courier service or five (5) business days after the date when mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid. Such requests, notices, demands and other communications will be sent to TPI, PCA and to Newco at the addresses indicated below: If to TPI: Tenneco Packaging Inc. 1900 West Field Court Lake Forest, Illinois 60045 Attn: General Counsel Telecopy: 847/482-4589 -17- 18 With a copy to: Jenner & Block One IBM Plaza Chicago, Illinois 60611 Attn: Timothy R. Donovan, Esq. Telecopy: 312/840-7271 If to PCA: PCA Holdings, LLC c/o Madison Dearborn Partners, Inc. Three First National Plaza Suite 3800 Chicago, Illinois 60602 Attn: Samuel M. Mencoff Justin S. Huscher Telecopy: (312) 895-1056 With a copy to: Kirkland & Ellis 200 East Randolph Drive Chicago, Illinois 60601 Attn: William S. Kirsh, P.C. Telecopy: 312/861-2200 If to Newco: Packaging Corporation of America 1900 West Field Court Lake Forest, Illinois 60045 Attn: Chief Executive Officer Telecopy: 847/482-2446 or to such other address or to the attention of such other Person as the recipient party has specified by prior written notice in accordance with the procedures provided above. Notices to any other holders of Registrable Securities shall be sent to the address specified by prior written notice to Newco, TPI and PCA in accordance with the procedures provided above. (g) NO THIRD-PARTY BENEFICIARIES. Subject to Section 10(k), this Agreement will not confer any rights or remedies upon any Person other than Newco, TPI and PCA and their respective successors. -18- 19 (h) ENTIRE AGREEMENT. This Agreement (including the documents referred to herein) constitutes the entire agreement among the parties and supersedes any prior understandings, agreements, or representations by or among the parties, written or oral, that may have related in any way to the subject matter hereof. (i) GOVERNING LAW. The corporate law of the State of Delaware will govern all issues concerning the relative rights of Newco and its stockholders. All other questions concerning the construction, validity and interpretation of this Agreement will be governed by the internal law, and not the law of conflicts, of the State of Illinois. (j) SEVERABILITY. In the event any provision in this Agreement is held to be invalid as applied to any fact or circumstance, it shall be ineffective only to the extent of such invalidity, and such invalidity shall not affect the other provisions of this Agreement or the same provision as applied to any other fact or circumstance. (k) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the parties hereto and their respective successors and any Person who becomes a holder of Registrable Securities. This Agreement shall inure to the benefit of and be enforceable by the parties hereto and their respective successors and any Person who becomes a holder of Registrable Securities (to the extent provided herein with respect to Registrable Securities of the type held by such holder). (l) COUNTERPARTS. This Agreement may be executed in counterparts. (m) TERMINATION. The rights of all holders of TPI Registrable Securities under this Agreement shall terminate as of the date when TPI, together with its Affiliates, holds Registrable Securities with a fair market value of less than $500,000. -19- 20 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. NEWCO: Packaging Corporation of America By /s/ Richard B. West --------------------------------------- Its Secretary --------------------------------------- TPI: Tenneco Packaging Inc. By /s/ James V. Faulkner, Jr. --------------------------------------- Its Vice President --------------------------------------- PCA: PCA Holdings, LLC By /s/ Samuel M. Mencoff --------------------------------------- Its Managing Director --------------------------------------- -20- -----END PRIVACY-ENHANCED MESSAGE-----